Patriarchal Hierarchy: Market Capitalism and Production in Afghanistan 3030984060, 9783030984069

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Kambaiz Rafi

Patriarchal Hierarchy Market Capitalism and Production in Afghanistan

Patriarchal Hierarchy

Kambaiz Rafi

Patriarchal Hierarchy Market Capitalism and Production in Afghanistan

Kambaiz Rafi Bartlett Development Planning Unit UCL (University College London) London, UK

ISBN 978-3-030-98406-9    ISBN 978-3-030-98407-6 (eBook) https://doi.org/10.1007/978-3-030-98407-6 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Switzerland AG 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

State institution (re-)building in Afghanistan by the US-led coalition during 2001–2021 entailed a market-led economic policy that was principally based on state non-interference in resource allocation. It relied on private individuals guided by market prices to undertake this role—as the principal means for society’s material development. The present volume calls attention to the limitations and possibilities of this policy, with a focus on individual socially contingent knowledge (knowledge derived from social conditions  through lived experience)  to undertake resource allocation. The study context, Afghanistan (2001–2021) has rarely attracted scholarly attention other than a focus on conflict and terrorism. Hence, the book proposes a novel topic and methodological approach that has policy and theoretical relevance. It particularly highlights the importance of institutions originating in social structures—the most prominent being patriarchal hierarchy in the family—in channelling resource allocation  and the limitations of ‘market prices’ as a policy instrument. The book is based on empirical evidence gathered in 2018 (nearly 17 years since the economic policy had been in place in Afghanistan) through extensive firsthand fieldwork, focusing on one economic sector: manufacturing. This was because, apart from this sector’s transformative role in economic history, market economy of Afghanistan could be better examined in this way owing in part to Afghanistan’s pre-2001 economic configuration: a war economy coupled predominantly with primary production (illicit and subsistence farming). Signs of transformation towards a larger role for manufacturing sector could throw into relief the outcome of the market-oriented policy during the study period if it pointed toward the v

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emergence of an economic configuration not entirely reliant on primary production but a more complex and varied one. At the micro-level, the book’s logical line follows an underlying thread: individual economic motivation and how it is primarily shaped by what is called embodied (or ‘informal’) institutions in the book. Using this empirical device, the book provides a contribution to what is, at the macro-level, a policy debate: whether adoption of market-oriented policy was adequate for the development of manufacturing sector as a precursor for an economic configuration relatively more productive than an economy reliant predominantly on subsistence farming. The book combines concepts from institutionalist  political economy and economic sociology for its empirical component. The role played by embodied institutions originating in the patriarchal family hierarchy was observed in explaining the decision-making process behind the investments. This methodological approach helped bring out a relatively more complex picture than can be afforded by the parsimonious methods that are nowadays common in mainstream economics. Related to policy-relevant research and application, the open concepts in the book (the set of embodied institutions rooted in the family hierarchy) are applicable to the study of other cases where some conditional similarities to the study case are present. Most importantly, these concepts permit preliminary speculation during the interval between policy formation and its implemenation, mostly in contexts where the policy terrain is yet not accessible for firsthand data collection (e.g., in the aftermath of the cessation of a conflict). Hence, these concepts allow a degree of context-­ sensitive policymaking when familiarity with the target society is not yet equipped with first-hand evidence and adaptation. When the latter is made possible by engaging in data collection in the field use of the conceptual framework would, in turn, help gather a richer data set as a posteriori knowledge for policy adaptations—this represents a significant break from the current approach to policy that fundamentally draws on an a priori assumption regarding its main unit of analysis: human economic activity as driven primarily and unchangingly by one universal motive. The book’s analysis follows a two-pronged approach. Firstly, it gauges the decision-making process for the investment in manufacturing sector, followed by an explanation of the adaptive strategies for enterprise continuation based on routine encounters with the salient elements of the field of production. Secondly, and derived from the findings of the

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empirical analysis, deductive observations were made regarding emergent signs within manufacturing sector that suggested whether it retained any significance in how economic resources were allocated in Afghanistan’s economy during the study period. It is of great importance to political economy of development to learn the implications of a market-oriented ‘non-intervention’ policy for manufacturing sector in a country which arguably witnessed the inflow of unprecedented international financial and human resources among least developed economies in the recent history of such outside assistance. Reflection on this topic should encourage rethinking regarding the current assumptions of mainstream economics when it comes to the development of this sector and the economy in general. This book is the outcome of innumerable contributions at various stages of its development. I extend my gratitude to Michael Walls and Le-Yin Zhang at UCL (University College London), whose attentive supervision and critical insights during my doctoral research—out of which this book was born—require a much longer account to do them justice. The diligent teaching and support by Colin Marx, Julio Davila and other members of the Development Planning Unit at UCL were key to consolidating my ideas. My time at King’s College London during my masters was an invaluable turning point, and I thank  in particular Alex Callinicos and Roberto Roccu. Roberto also kindly helped me prepare the original research plan for my doctorate, much later and beyond the requirements of his official duties. The many interviewees whom I have to keep anonymous deserve my utmost gratitude. I am indebted to their unconditional generosity for giving me access to information that forms the substance of this book. My friends Arif Hairat, Bashir Ahmad Esar, Sami Ehsas and Bahman Timori kindly helped me navigate the uncertainties of the first days in the field, assisting in accessing the needed information sources. The all-out support by my parents Mohammad Rafi and Raihana Rafi and my siblings provided the environment without which the arduous fieldwork would have been much harder to bear. I was lucky to benefit from a loan from my brother, Kiomars Rafi, and a US Department of Education Federal Student Loan during much of the period of my research. I am grateful to the American Institute of Afghanistan Studies for a small but helpful research travel grant in my second year. And very importantly, I thank my partner Mathilde Girardi

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who stood by me throughout this testing but rich research endeavour, endured the many hours of my absent-mindedness, put up with missed occasions for social life, and never denied me her unreserved love and support. I should add that despite the many intellectual contributions, I remain solely responsible for the contents of this book. London, UK

Kambaiz Rafi

Contents

1 Introduction  1 2 Literature Review: New Institutionalist Economics (NIE) 35 3 Theoretical Framework; Embodied Institutions 69 4 Enabling Environment Approach (EEA) and Aid Expenditure in Post-2001 Afghanistan137 5 Method155 6 Data Analysis: Habitus and Practical Knowledge of Production181 7 Data Analysis: Elements of the Field205 8 Data Analysis: Habitus and Adaptive Strategies for Enterprise Continuation257

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9 Conclusion289 Appendices305 Index319

About the Author

Kambaiz Rafi  is a researcher in political economy with a PhD from UCL (University College London). His research focuses on debates in economic resource allocation and the role institutions play in economic development. He has studied in Afghanistan, India and the United Kingdom. Born in Afghanistan, he holds dual (United States and Afghanistan) citizenship and currently lives in France. He writes regularly in English and Persian for peer-reviewed journals and online media.

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Abbreviations

ACBR-IP AIA AIE CI DoD DP EEA GDP IA IFIs IMF IP MAIL MoF MoIC NATO NDF NGO NNN NSIA PRSP QPS RCE RCT RQ RRCO

Afghanistan Central Business Registration and Intellectual Property Afghanistan Industrial Association Active Institutional Element Conversational Interview United States Department of Defense Deferred Payment Enabling Environment Approach Gross Domestic Product Institutional Analysis International Financial Institutions International Monetary Fund Industrial Park Ministry of Agriculture, Irrigation and Livestock Ministry of Finance Ministry of Industry and Commerce North Atlantic Treaty Organization National Development Framework Non-governmental Organization Non-pecuniary, non-committal and non-reciprocal social relationship National Statistics and Information Authority Poverty Reduction Strategy Paper Qualitative Proxies of Significance Rational Choice Economics Rational Choice Theory Research Question Relief, Reconstruction and Civilian Operations xiii

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ABBREVIATIONS

SAF SIGAR SOC SOE TC The Bank UN UNAMA UNDP USAID

Securing Afghanistan’s Future Special Inspector General for Afghanistan’s Reconstruction State-owned Corporation State-owned Enterprise Transaction Cost The World Bank The United Nations United Nations Assistance Mission for Afghanistan United Nations Development Programme United States Agency for International Development

List of Figures

Fig. 2.1 EEA in practice Fig. 3.1 NIE institutional schema as per Williamson (2000) Fig. 3.2 OIE institutional schema Fig. 3.3 Book institutional schema Fig. 3.4 Strategy for operationalizing conceptual framework Fig. 3.5 Four study domains in a manufacturing unit Fig. 5.1 Main IP in Kabul Fig. 5.2 Bagrami IP Fig. 5.3 Locations of Baghlan, Parwan and Kapisa provinces relative to Kabul Fig. A1 Number of ACBR-IP licences by sector in post-2001 period Fig. A2 Private business registration per province (2002 onward) Fig. A3 Number of licences issued in post-2001 period in Kabul Fig. A4 Minimum number of work hours/day Fig. A5 Maximum monthly salary (USD) Fig. A6 Minimum monthly salary (USD) Fig. A7 Daily wage (USD) Fig. A8 Item-based wages (USD)

62 78 91 98 110 126 166 166 167 315 315 316 316 317 317 318 318

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List of Tables

Table 3.1 Table 5.1 Table A1 Table A2 Table A3 Table A4 Table A5 Table A6

Institutional categories Industries in the research ACBR-IP registrations according to sector ACBR-IP registration according to sector (Kabul) Nodes for thematic analysis Interviewee classificatory details Drawdown of work hours Wage distribution (min to max range)

73 168 305 306 307 308 312 313

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CHAPTER 1

Introduction

The problem of individual decision making to allocate material-productive resources has been the subject of recurring contestation while often having in mind a ‘formal’ institutional setting—that which is codified in law and recognized by state political authority. This has meant that this contestation is often witnessed along the dichotomous debate of ‘non-­ intervention’ by a formal external agent in how this decision is made, against various degrees of ‘intervention’ by such bodies to participate in or coordinate this decision based on a plan (e.g. state direction based on an industrial policy). Focusing on the ‘formal’ milieu has perforce led to the gradual exclusion in political economy research of the effects of other non-­ codified or ‘informal’ institutions as also relevant in the study of this decision—particularly in societies where ‘codified’ domains of socio-political life are not yet expansive. This is the problem with which this book engages: studying the effects on individual allocative decisions of ‘informal’ (i.e. embodied or implicit) institutions in a recent case, Afghanistan during 2002–2018, by investigating the practical knowledge that has shaped this decision—the use of practical referring to this knowledge’s transmission primarily in a learning process centred on practising a profession during a lived experience, rather than through formal didactic means. Building on this theoretical point, the book, in a further step, analyses the effects of this decision-making and the subsequent encounter with the field of production on whether manufacturing sector grew structurally significant (criteria for doing so discussed below) in the economy of Kabul, © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 K. Rafi, Patriarchal Hierarchy, https://doi.org/10.1007/978-3-030-98407-6_1

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Afghanistan’s capital and largest city by population, which attracted more than half of the private investments in the country during the aforementioned period (see Sect. 1.5 for more detail). This investigation was inevitably framed within the above dichotomy of intervention versus non-intervention due to this debate’s preeminent relevance in also shaping post-2001 Afghanistan’s economic policy, including in Kabul’s case.1 The policy in Afghanistan was formulated mostly externally during a period that the country witnessed concerted effort by myriad foreign and domestic actors to establish or rehabilitate most areas of ‘formal’ governance after prolonged war. This investigation is, as such, at once a study of the micro-level of individual decision-making and its impact on the manufacturing sector’s development, and by that same process a reflection on the economic policy of Afghanistan during this period. The book considers the role of the ‘non-intervention’ approach that has gained ascendancy from the 1970s and 1980s in economic development (Harvey, 2005; Glyn, 2006). This has, since the 1990s, been accompanied by a growing intellectual and policy shift to accommodate the role formal institutions of the state can play to sustain such forms of resource allocation (Rajagopal, 2008). The line of thinking that weds a ‘market-­ oriented’2 policy with the suitability of the institutional environment for it to come about is encapsulated in a strategy that has been referred to in the book as the enabling environment approach (EEA). The ideas for this approach have gradually emerged from the early 1990s and are articulated more coherently in policy documents by the World Bank. Considering this focus on ‘institutions’, expert discussion on this phenomenon has also, in parallel, gained momentum, and various conceptions of this term, rooted in earlier traditions, have entered the intellectual debate (see Hodgson, 2006). Despite this plurality, the work by New Institutionalist Economics (NIE) in this area has carried more weight in shaping World Bank thinking (see, in particular, Chhibber et  al., 1997; World Bank, 2001, 2002), which has sought to marry the analytic tools of neo-classical economics with an institutionalist reading of economic productivity in different societies at present and throughout history. The 1  In the text, ‘Afghanistan’ is used when the discussion is on the general political economy backdrop. The empirical ground is Kabul (2002–2018). 2  The inverted commas throughout the book indicate—apart from proper nouns or new concepts—a problematization of the taken-for-granted concepts. Here, ‘market’ is marked this way to indicate that this concept’s real existence, as a milieu of exchange, warrants empirical research or, at the least, should not be assumed as uniform, existing everywhere in the same way with an invariant substance.

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World Bank World Development Report 1997 regarding “the state in a changing world” draws heavily on works by NIE thinkers, among them Douglass North’s influential book Institutions, Institutional Change and Economic Performance (Chhibber et al., 1997, p. 178)3 (see Chap. 2, Sect. 2.2. for detailed treatment of this and other World Bank documents relevant to the topic at hand). The view on institutions premised on the necessity of the legal and socio-normative environment to realize market-­based productive activity has played a significant role in configuring the World Bank’s Comprehensive Development Framework, which has formed the basis of World Bank and International Monetary Fund (IMF) Poverty Reduction Strategy Papers (see the report by the World Bank president James Wolfensohn, 1999). North and NIE’s contribution is particularly pronounced in the World Bank World Development Report 2002: Building Institutions for Markets:4 Markets allow people to use their skills and resources and to engage in higher-productivity activities if there are institutions to support those markets. What are these institutions? Rules, enforcement mechanisms, and organizations supporting market transactions. (World Bank, 2002)

NIE has made important strides in wedding individual micro-level wealth-maximizing behaviour by organizations/entrepreneurs within the macro-level of formal and informal institutions and enforcement mechanisms in a disciplinary tradition that straddles political science, economics, sociology, history, legal studies and many other fields of social sciences. The unifying objective in this tradition is to account for dynamic movements in economic history based on a conception of development that seeks to complement but go beyond the static neo-classical theory that is seen (e.g. by North) as inadequate to account for historical change or stagnation. Important work in NIE investigates why certain societies have managed to achieve higher productivity and others have failed to do so by a sufficient degree (however this is measured). The answer to this is sought in a study of formal and informal institutions as the scaffoldings within the constraints of which wealth-maximizing individual practices, with high or low relative productivity as a result of higher or lower transaction costs, are explained. The present volume derives enabling environment approach or EEA in two ways. Firstly, it reviews important World Bank documents in the 3 4

 North was also among the group of advisors who helped create the report.  The report begins with a quote by North.

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1990s, a period during which the use of ‘enabling environment’ and its semantic intricacies for policy purposes gradually emerge. Secondly, it investigates the gradual influence the conception of ‘institution’ has had on the World Bank’s development policy. The treatment of NIE in the book, therefore, is not in the sense of critically evaluating a causal link between it and EEA, an exercise which is difficult to justify in a study given that doctrinaire transfer of ideas into the policy realm is often not perfect even in the case of fundamentally dogmatic polities. It is merely meant to bring out the conception of ‘institution’ the World Bank-devised EEA has in view, which is derived more coherently from NIE’s articulation of this concept among other sources. This alignment is made easier also due to the substantive orientation seen in a primarily market-oriented development model pursued by the World Bank, and NIE’s investigation of the role of market frictions as an impediment to productivity (i.e. taking market-­based allocation as a given). In comparison, the other prominent institutionalist school in economics, Old Institutionalism (OIE, also called evolutionary economics or institutional political economy) does not lay primacy on markets (see Rutherford, 1994), which has made NIE’s work the paramount theoretical field from which the World Bank’s pro-market policy is mostly derived. This book has synthesized some seminal works to trace the principal ideas in NIE, keeping in mind differences (Rutherford, 1994) within this tradition5 and that this is not all that is associated with this school (Coase, 1937, 1959, 1960, 1998, 2005; North, 1990, 1991, 1992, 1993, 2005; Williamson, 1973, 1993, 2000b, 2005; Ostrom, 1998, 2005, 2007; Putnam, 1993; Olson, 1965; De Soto, 2000; Menard and Shirley, 2005; Mickiewicz, 2010; Acemoglu and Robinson, 2012). On the other hand, the ideas in OIE have made no discernible contribution, to my knowledge, to how international financial institutions (IFIs) have formulated EEA, though its ideas are useful in a critical take on NIE—the book partly draws on the ideas of institutions in this school (see Chap. 3, Sect. 3.1.). The choice of the study case, Kabul (2002–2018), is apposite partly to examine the outcome of the human and financial cost expended in Afghanistan in general during the study period, in a country that arguably 5  For instance, North sets a distinction between his and Oliver Williamson’s approach in particular, calling his the ‘University of Washington Approach’ (see North, 1990, p.  27). Rutherford (1994, p.  17) distinguishes between the broad ‘Austrian’ and ‘Neo-classical’ wings in NIE.

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witnessed a “golden age”6 of some form unprecedented in its history regarding some of its aspects. To illustrate, adjusted to inflation the expenditure on Afghanistan’s ‘reconstruction’ overtook the Marshall Plan as the United States’ most costly foreign intervention as of July 2014 (SIGAR, 2014). When reading this book’s analysis and findings, one should keep in mind this unprecedented historical context. If a manufacturing sector has emerged in this period, was it sufficiently durable and large to match the scale of financial inflow into the country? Though not the primary focus of the empirical investigation, this question should find an answer in the reader’s mind by the book’s end. The primary research interest remains theoretical while bearing in mind a developmental concern: to contribute to debates on the micro-level of allocative decision-making, connecting it to the political economy of secondary sector development in a critical reflection regarding the EEA policy in Kabul (2002–2018). EEA’s implementation in practice in Kabul was seen in the absence of state intervention for (in)direct coordination of individual resource allocation or participation therein. As will be discussed in more detail, this policy is underpinned by the assumption that individuals will independently decide to invest if, most importantly, governmental institutions (laws and regulations) for such investments are assembled and enforced—the environment becomes enabling. The problem of coordinating the allocation of (non-)material resources in the economy is hence left to ‘open’ markets to manage that are believed to facilitate exchange between individuals. In some of its first iterations in the twentieth century, this perspective on economic management is found in the ideas of Ludwig Von Mises (2012[1920]), later developed by Frederick Hayek (1945),7 who postulated that markets facilitate exchange between individuals who are holders of tacit or explicit information concerning the fleeting and durable opportunities in their immediate vicinity in time and space. Information that is available to and serviceable by them as buyers and sellers is reflected in the prices they agree upon that guide their decision to allocate resources, thereby resolving society’s allocative problems of what, when, how and for 6  In contemporary political economy, the term has been used by economist Stephen A. Marglin (e.g. in Marglin, 1992) for the 1950s–1960s high rate of socio-material development mainly in Europe, North America, the Soviet Union, some East Asian countries and Australia. 7  For a discussion of differences between Mises and Hayek on this topic, see Salerno (1990).

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whom to produce. This self-perpetuating “marvel” of market prices (Hayek, 1945) is believed to function as a highly complex yet spontaneous communication device that regulates allocation without the need for, or the possibility of,8 state or community political control concerning its myriad details. This book attempts to re-direct the epistemological lens regarding the problem of resource allocation to degrees of coordination affecting individual decisions at the social level, that is, the effects of implicit embodied institutions as determinants of resource allocation even where ‘formal’ policy sanctions a non-intervention allocative regime. In this way, I mean to study the form of coordination determined by social structures that shape individual social behaviour in general, including their choice of profession and hence their allocative preference. Put another way, bureaucratic non-intervention of state institutions in economic resource allocation does not preclude the effects other institutions at the social level might have on this area. The social structures transmitting these implicit institutions reside in the objective surroundings of the individual, for example family, material and ‘symbolic’ wealth, physical environment, religious and ethical codes, and so forth. This objective reality produces “subjective” potentialities in individual actors, which, in turn, come into constant contact with objective conditions in routine life—conditions similar to those that initially produce this subjective potentiality and others that are new and overlay new dispositions upon this potentiality. The subjective potentiality therein inculcated reproduces the structures that are the site of its initial production and subsequent development with various degrees of homology or deviation. A form of “internalized objective  [emphasis mine]” structure, this potentiality functions as a spontaneous generative mechanism for social practice through the individual agency. A “structured structure” that functions as a “structuring9 structure”, this concept is encapsulated in contemporary political economy and sociology in the term habitus by Pierre Bourdieu (1971, 1980, 1984, 1986, 1990, 1998, 2000; Bourdieu and Passeron, 1977; Bourdieu and Wacquant, 2007). Habitus is a “dynamic, multi-scalar, multi-layered” (Wacquant, 2016) schema that 8  For a critique of such centralized resource allocation, see Ludwig von Mises’s 1920 essay Economic Calculation in the Socialist Commonwealth (1990). 9  Structure here meaning the arrangements in society that emerge from and condition human behaviour (e.g. family, religion, law, mode of production, political power).

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inhabits an individual, is deposited as dispositions, and makes possible practical decisions in social life based on self-activated individual agency. It is an objective reality turned into subjective disposition that leads to the spontaneous capability to interact with and (re)produce objective reality(ies). We will see in the theoretical part of this book that, related to an institutionalist reading of resource allocation, the adoption of this lens transforms the nature of norms and rules as more than “constraints”, as is suggested in NIE (e.g. by North, 1990, 1991, 1992, 1993, 2005), but rather considers them as elements that generate an ordering mechanism that organizes human social relations through recurring practice. These recurring practices are embodied by social agents and transmitted through their habitus; thus, they are not distinguishable from social practice as such—as an external constraint to some inherent human capacity. The institutionalized effects of habitus in regulating resource allocation are, moreover, mediated by the objective conditions they are placed in, both conditions in the larger political economy and those lying within a social domain as an autonomous microcosm or, as referred to by Bourdieu, a “social field” (Bourdieu and Wacquant, 2007). As one effect of habitus’ function, the professional information that is serviceable by habitus is often a product of the objective social condition of habitus’ production. To wit, why a herdsman in a rural region chooses (assuming his agency as the main determinant) to become a herdsman and not an atomic scientist is due to his habitus’ effect that accommodates the available information regarding the set of life-chances in his surroundings, including the choice of profession in which the latter might not only be unavailable but rationally unthinkable. From the available life-chances it seems practically rational for him to choose one, that is, becoming a herdsman, while becoming an atomic scientist might not constitute a practically rational option within his horizon of expectations,10 if it crosses his mind or he is aware of this option at all.11 Similarly, choosing to become an investor in the manufacturing sector is conditioned by the scarcity or 10  The adaptation of individual expectation to the possibilities in the environment (reflected also in what forms of professions they choose) is witnessed in some ways in Amartya Sen’s criticism of Benthamite or choice-based utilitarianism (Sen, 2000, p. 62), though without the epistemological purpose for which it will be employed here—meaning that the effects of this adaptation on the development of an economic sector do not form the main purpose of its use by Sen (see Sen, 2000 for detail). 11  This excludes rare exceptions and has in view a general social pattern.

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normality (taken-for-granted commonality) of the knowledge of this sector in a society where this form of knowledge is (or isn’t) widely available to investor habitus. Assuming that the adoption of a non-intervention allocative regime (i.e. open markets) constitutes a sufficient strategy to develop this or any other sector therefore takes inadequate account of the possibilities that habitus permits. We will see that in the case of Kabul, the effects of habitus were observed in investments in the manufacturing sector by individuals who have had early exposure to this form of ‘trade’ through their lived experience within the context of institutionalized practices that were more notably determined by the codes that define the family hierarchy in its interaction with religious injunctions. This contributed to this sector not showing the signs of having obtained a structurally significant role in the economy, reflecting the fact that such a socially contingent exposure to manufacturing as a possible professional life-chance remains scarce in Afghanistan’s economy where the role of this sector has traditionally been negligible (or managed by the state)—also considering the many decades of war that have disrupted licit economic life. From a non-material standpoint (i.e. relations of production), a policy of non-intervention in objective reality in the case of Kabul (2002–2018) meant the opening of the domain of production to individuals whose habitus is conditioned by existing objective hierarchies of power in society. Leaving a social terrain open has led to a relatively unbridled transmission of the unequal hierarchy of power from one social domain to another. The findings in this research suggest a relatively homologous reproduction of the dominant hierarchy of decision-making in the family structure (top-­ down patriarchal) in the governance structure of manufacturing units. If internal hierarchy is necessary for the extraction of surplus value “in the production process” in a capitalist firm (Screpanti, 1999), studying the cultural form of this hierarchy helps explain to what extent it operates to allow for unhindered reproduction of unequal power hierarchies. This is a task the research has intended to achieve by looking into the non-material aspect of manufacturing activities in addition and inherent to their material dimension. *** The study period under focus in Kabul coincides with the military invasion of Afghanistan by a United States (US)-led military coalition in October

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2001, which continued officially under the leadership of the North Atlantic Treaty Organization (NATO) until 31 August 2021 when all foreign forces left Afghanistan. The invasion was in reaction to the string of attacks on US soil on 11 September 2001, by individuals affiliated with the Al-Qaeda organization, a Muslim militant group whose leadership at the time, including its founder and principal leader, Osama bin Laden, was based in Afghanistan. The group was hosted by the Taliban, another Muslim militant group that seized Kabul in late September 1996, its forces having overrun most of Afghanistan’s territory by 11 September 2001 (see Rashid, 2010 for a history of the Taliban). The US-led military coalition came to the aid of the Islamic United Front for the Salvation of Afghanistan (also known as the ‘Northern Alliance’), a coalition of Afghan politico-militant parties that had until then been fighting what they referred to as a war of resistance against the Taliban’s complete take-over of Afghanistan mainly around its strongholds in Central and Northeastern Afghanistan. The two coalitions jointly forced the Taliban out of Afghanistan’s major provinces before the end of 2001. Subsequent events set in motion by an agreement at an international conference on Afghanistan in December 2001 in Bonn, Germany, involving Afghan and non-Afghan stakeholders, ushered in a series of changes in the country’s politics, culture and economy. However, by late 2002 (Smith 2011) the Taliban had resurfaced as an insurgency (see Guistozzi, 2009, for post-2002 transformation of the Taliban) and pursued a militant opposition against the US-led coalition and the armed forces of the post-2001 United Nations (UN)-recognized government of Afghanistan (government hereafter) until they regained power in Kabul on 15 August 2021. In parallel to continued insurgency as a determinant of Afghanistan’s political economy during the study period (determinant ‘1’ hereafter), which intensified from 200212 onward and included groups other than the Taliban, the country underwent an attempt at rebuilding its governance institutions in a process overlapping state and nation-building mandates (‘project’ for short—the book will not be dealing with these concepts 12  Afghanistan’s status was changed from “post-conflict” to “actively in conflict” by the UN in 2017. The country ranks consistently among ‘High Alert’ countries in the recent Fund for Peace Fragile State Index reports (Fund for Peace Fragile State Index, 2014, 2015, 2016, 2017, 2018, 2019, 2020). According to the Institute for Economics and Peace 2019 Global Peace Index, Afghanistan replaced Syria as the least peaceful country in the world (Institute for Economics and Peace, 2019).

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hereafter; however, for a discussion on ‘nation-building’ and ‘state-­ building’ in post-conflict contexts see Bogdandy et  al., 2005; Rubin, 2006; for a sociological distinction between these concepts see Lemay-­ Hébert, 2009; for the history of ‘state-building’ as a concept see Berger, 2006). The project’s general orientation was formulated, from the vantage point of its earlier stages, as a post- conflict’13 reconstruction. Concerning its various aspects and not always in concert with each other, the actors that spearheaded the project included the US government, primarily the US Department of Defense (DoD) and the US Agency for International Development (USAID), Washington, DC-based IFIs (foremost among them the World Bank and IMF), the UN system, regional development banks (notably the Manila-based Asian Development Bank), major multi-lateral development agencies of member states of the European Union, national and international non-governmental organizations (NGOs) and countries in Afghanistan’s regional neighbourhood.14 The bureaucratic agencies of the newly created Afghan government also assumed a growing implementation role with time and growing capacity. Due to the US government’s reluctance to engage in ‘nation-building’ and the UN’s extensive pre-2001 connections with Afghanistan, the latter assumed the project’s leadership most significantly in its initial stages (Smith, 2011). The country represented the first experiment in implementing the important Brahimi Report’s recommendations for UN peacebuilding missions led by Lakhdar Brahimi himself as the head of the UN Security Council-mandated ‘United Nations Assistance Mission in Afghanistan’ (UNAMA) (Rubin, 2006). Narrowing the focus to the area of economic policy, out of the above main actors, the IFIs led the formulation of an economic model intended for the establishment of enabling environment (called EEA in the book) for private sector investments (determinant ‘2’ hereafter). A policy that also involved the liberalization of trade and exchange rates, privatization, liquidation of state assets and ‘macro- economic stability’ (see Ames et al., 2001 for the IMF’s definition of this term). The EEA policy was enshrined in article 10 of the Constitution of Afghanistan that came to force in 2004, stating that “the state shall encourage, protect as well as ensure the safety 13  It should be noted that in the early post-2001 years, the Taliban’s formidable resurgence was still an event in the future. 14  Commonality of purpose among these actors did not mean absence of “divisions, rivalries and fragmentations” among its implementors (Rubin, 2006).

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of capital investment and private enterprises in accordance with the provisions of the law and market economy” (see Rubin, 2004 and Smith, 2011 for a general discussion on the 2004 Afghanistan Constitution). To offer a synoptic summary of the study context’s political economy insofar as it is relevant to Kabul’s manufacturing sector during the period 2002–2018, it was shaped by the above two determinants as its pre-eminent backdrop, that is, the ongoing militant insurgency and the market-oriented EEA. These two did not exhaust the list of other potential and actual determinants of the political economy of Kabul and Afghanistan in general during 2002–2018. However, focusing on these two in the research was for reasons of method, as they were integral parts of the analysis considering that they mediated manufacturing activities as a social field (together with conditions lying within this sector). It is through a regular encounter with this field that the manufacturing sector in Kabul (2002–2018) was configured the way it was, the former functioning as a continuous backdrop to most activities in Afghanistan during the study period, including manufacturing activities, and the latter directly shaping how resource allocation was managed in the economy. The term ‘conflict-affected market economy’ encapsulates this political economy milieu. From the two determinants, the factors that directly sustained the first determinant (continued insurgency) lay largely beyond the will and control of the above set of actors. The second determinant, conversely, was the product of a policy decision. A choice between alternative strategies for economic resource allocation was made in the immediate aftermath of the ouster of the Taliban regime, and enshrined in law, which makes this policy choice liable for a critical study of this kind after it was in place for nearly two decades—albeit focused on one economic sector and in Afghanistan’s capital and largest city by population, Kabul (2002–2018). *** In this book, Chap. 2 builds the theoretical foundations from which World Bank EEA policy has been drawn. This is done through a review of secondary data, including a section on the history of the development of EEA as a policy concept from the early 1990s and its coherent conceptualization by the World Bank in its annual ‘World Development Reports’ thereon. Chapter 3, building on this and a critical engagement with the idea of ‘institutions’ in NIE and OIE, provides the definition of the concept of ‘institution’ used in the book. The chapter explains the pertinence

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of the Bourdieusian framework as a conceptual lens to the study of the research topic, where workable thinking tools are developed to analyse empirical data. Chapter 4 spells out the history of the adoption of EEA as the main strategy orienting the policy in Afghanistan during the study period, reviewing the genesis of determinant ‘2’ in a historical juncture that approximates what Ackerman (1991) has called a “constitutional moment”, in a recent example in the world, that is, a historical juncture in Afghanistan formalized by its 2004 Constitution. This chapter also includes a review of secondary data on ‘aid expenditure’ as a formidable instrument accompanying the military component of the project of ‘rebuilding’ in Afghanistan during the study period. As such, Chaps. 2 and 4 both constitute a literature review while Chap. 3 develops the theoretical framework of the book—their placement in the book considers the issues of flow and thematic consistency. The movement from Chap. 2 to Chap. 4 follows from the level of policy to the level of practice, suggesting one primary point: economic policy in Afghanistan during 2002–2018 was designed, by exogenous forces (the actors formulating the project), along EEA. Chapter 5 discusses the methods used for gathering data and their analysis, including the tools used to this end, the ontological and epistemological assumptions informing the book, the technical details, and the complications of fieldwork in the context of Kabul. Empirical data analysis is presented in Chaps. 6, 7 and 8, regarding the micro-level individual cases of manufacturing activities based on fieldwork data which the research takes as a reflection, in real terms, of what EEA entailed concerning this important sector in the economy. This point is primarily meant to view EEA not as an “in-and-of-itself” phenomenon that resided in an abstract sense, but in terms of its real existence, dependent and revealed by how it shaped tangible, empirically researchable practice. The order of Chaps. 6, 7 and 8 reflects a diachronic sequence: entry into manufacturing sector, encounter with this field, strategies for continuation. Chapter 6 demonstrates the decision-making process that led to ‘entry’ into the manufacturing sector, where the first Research Question or RQ1 (discussed below) is addressed, seeking the underlying structural mechanisms at work. Chapter 7 consists of two sub-sections, both suggesting the subsequent-to-entry first-hand contact and recurring encounter with the conditions of the field of production as a social microcosm. The

1 INTRODUCTION 

13

chapter builds the salient elements of this microcosm. Finally, Chap. 8 explains the adaptive strategies for ‘continuation’ of the enterprise where the question of how (or RQ2) is addressed. In an answer to RQ3, Chap. 9 synthesizes the points raised in the analytic chapters, connecting them to the book’s argument to summarize and explain the outcome of these investments for the manufacturing sector’s structural significance in the economy and its effect in the form of reproducing the patriarchal family hierarchy through the effects of habitus.

1.1   Research Problem By now, it should have become somewhat clear to the reader that EEA’s implementation in Afghanistan was intended for the establishment of ‘institutions’ that supported private sector investments. The notion of ‘institution’ under this policy connotes primarily laws, regulations and guarantees for protection of property right that are “conditioned on stable, solid constitutional frameworks” (Olson as quoted by Mickiewicz, 2010, p. 49). The latter is to guard against the arbitrariness of state executive power and provide an independent judicial system for dispute resolution, among others. According to this perspective, the character of private property is not confined to private ownership of an asset, but also assumes the capability to access a wide array of other ‘resources’ (i.e. institutional resources) that are needed for investments based on private contract (Hayek as quoted by Mickiewicz, 2010, p.  50). This legal mechanism underlying EEA is aimed at facilitating a resource-allocative regime in which ‘market prices’ generate order by functioning as an “unconscious coordination mechanism” without the need for “a central intelligence” (Samuelson, 1967, pp. 40–53), relaying information that is adequate for allocating society’s economic resources optimally (Mises, 1990[1920]; Hayek, 1945). How this ‘optimality’ seems in concrete form is difficult to pinpoint or quantitatively measure. However, to Hayek (1945), leaving individuals as “free” as possible is the most appropriate way to achieve it. In this way, market functions as a homeostatic organism that self-regulates (Mises, 1990[1920], see also Coase, 1937 for elaboration), where contesting forces are balanced spontaneously through competition and the end-result of allowing its free operation is the fulfilment of the private investor’s wealth-maximization. As an unintended consequence, society’s welfare is also thereby augmented, most directly through employment

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generation and contribution to the public fund by expanding the population of tax-givers (World Bank, 2011). In “non-Western developing countries” the weaknesses or absence of the legal aspect underpinning this system, as pointed out by Hernando De Soto (2000), is what impedes development. That is, the absence of “formal” (recognized by the state) institutional mechanisms for converting ‘things’ into capital. De Soto maintains that the problem of development is not lack of capital in these countries but lack of access to legal means to convert idle assets into active assets. The poor “do have things, but they lack the process to represent their property and create capital”; they have “houses but no titles; crops but not deeds; businesses but not statutes of incorporation” (De Soto, 2000, p. 7). Most recently, Acemoglu and Robinson (2012) have contributed to this debate by arguing that not just any formal legal mechanism of the state supports economic “success”, but those that ensure “inclusivity”. Inclusive in their view denotes those types of formal institutions that make possible participation by all members of society in all matters of social life. The opposite of it they call “extractive”, by which they mean formal institutions that, by design, limit access to certain benefits from some public goods to particular “sub-groups” in society. In their dichotomous formulation, they contrast the general categories of “inclusive state institutions” (i.e. centralized but pluralistic) with “extractive state institutions” (non-­ centralized and non-pluralistic). One form of institution they point out as inclusive is a market-based allocative regime which, according to them, is premised on ‘openness’, that is, opportunities are by design open to everyone in such an allocative arrangement. State-level politics, therefore, matters as a determinant of the level of economic well-being societies tend to experience, along either inclusive or extractive lines. State political decisions taken in the past (i.e. centuries) that have led to the emergence of different types of institutions at present are, from this viewpoint, accountable for present differences in the level of economic well-being in material terms. They advocate for ‘good’ institutions, which according to Acemoglu and Robinson are predicated on laws that guarantee private property and a market economy. At a fundamental level, this regime of resource allocation, as an ontological presupposition, is predicated on the idea of a monolithic human ‘rationality’ based on the notion of it being informed by a uniform interest for obtaining utility maximization (Mickiewicz, 2010).

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15

The book places its focus on this epistemological presupposition underlying EEA as a policy that came to bear on how the problem of production in a context like Kabul (2002–2018) was managed. I contend that this approach to resource allocation takes little account of the empirical individual interest (individual human as actually existing, rather than being assumed a priori15) and her/his institutionalized normative practices transmitted through habitus, a concept which Bourdieu defines as: A system of lasting, transposable dispositions which, integrating past experiences, functions at every moment as a matrix of perceptions, appreciations, and actions. (Bourdieu, 1971, p. 83)

Habitus is the “generative mechanism” of social practice encompassing also human economic activity. It operates as a dynamic dispositional mechanism consisting of layers (precedent, antecedent, economic, spiritual and so on) and scales (individual and social) that are social rather than natural, can be transferred from one domain to another, are constantly changing but have durable inertia based on an originally accumulated pool of individual lived experience (shaped more decisively during early childhood), and that work to generate endlessly differentiated practices that, despite being diverse, remain limited to a socially contingent range due to the commonality of the social structures that condition habitus among members of a society (Wacquant, 2016). Habitus’ effect conditions attainment of the  knowledge of the objective life-chances in the environment, the norms, beliefs, rules and conventions that the society’s members embody, practise and follow, and its subsequent externalization in the form of social practice that, while dependent on the conditions that produce habitus, is not limited to their exact reproduction. Closer to the research purpose, habitus also retains the knowledge of professional possibilities, setting the expectation of social members in line with what is permissible and attainable, what is not permissible and lies beyond reach, and many options that fall outside its spectrum of expectations. The study case is an example where knowledge of manufacturing is seen as conditioned by habitus in ways that depend on embodied 15  A priori knowledge is used here to mean that which comes before experience and is logically independent of it, and hence not derived inductively through experience. In contrast, a posteriori (after the fact) knowledge is that which is dependent on a certain amount of experience to arrive at.

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institutionalized behaviour that is embedded in social structures—rarely on self-­regulating ahistorical market prices. This has clear implications for economic transformation away from the  dominant regime of resource allocation (subsistence and illicit farming in the case of Afghanistan). The general topic of inquiry of the book deals with the problem of the decision- making mechanism shaping resource allocation by private individuals and the implication of this for the development of manufacturing sector in the conflict-affected market economy of Kabul (2002–2018). The book’s objectives are as follows: 1. The study of the structuring effects of embodied institutions (informal institutions) transmitted through habitus on the decision to invest in manufacturing in the context of Kabul (2002–2018); 2. The study of the adaptive strategies for enterprise continuation considering the habitus’ subsequent conditioning effect following entry into the sector; more specifically, related to the governance structure of the units; 3. Explaining the structural significance of the manufacturing sector in Kabul this led to based on qualitative proxies derived from ‘1’ and ‘2’. The questions the research answers, derived from the above research objectives, are as follows: RQ1: What knowledge structured private individual decision, leading to the investment in the secondary sector in Kabul during 2002–2018? RQ2: How was the enterprise continuation ensured following entry and encounter with the conditions in the field of production? RQ3: What form of manufacturing sector came about as a result? To locate the contextual social milieu of the production of individual habitus in Kabul, the research relied on a study of the top-down patriarchal family unit in its interaction with Quranic injunctions as the most tangible representation of the prevalent religious ideology, Islam. This epistemological device was used to arrive at active institutional elements (AIEs) conditioned by habitus. AIEs are the micro-analytic tools that explain the decision-making regarding the investment and its continuation. These are ‘particulars’ among a general category called institutions. In view of the fact that social space is the field for myriad norms, rules, conventions and beliefs, not all were relevant in structuring individual

1 INTRODUCTION 

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behaviour for making a professional choice. The AIEs used in the research were, therefore, those specifically relevant as explanatory elements in the production field.

1.2   Argument In a general sense, productive resource allocation is ideally meant to lead to an expansion of its value16 relative to its original state. Whether carried out by private individuals or the public sector, the principle guiding this economic fact has remained largely consistent since the inception of the capitalist system. A capitalist investment, however, comes with an inherent socially significant dimension that is indivisible from its purely material dimension. For instance, material growth on its own might lead to outcomes by which the gain accrues to a few, which can be considered undesirable to the extent that its non-material outcome aggravates social injustice. In a known form, the presence of high levels of material achievement has often been sustained by slave labour or extremely low wages. Material growth in these instances has had the inherent social component in the form of the enslaved conditions of a section of society who might have fared better if it had never occurred. To point out one relatively obvious outcome relevant to the case in hand, a gain skewed in favour of a few (i.e. ‘income inequality’) might have led to a situation where the (re)onset of a widespread pre-2001 political regime (the Taliban) did not represent a ‘disturbance’ to those who did not have a stake in the post-2001 status quo. Similarly, conversely and perhaps equally consequential were the effects of a disturbance of previous arrangements of social and economic power too abruptly, which may have also precipitated a similar conclusion. Similarly, presence of high levels of poverty is seen to become threatening to social harmony and the latter can exacerbate reasons for poverty (Chun, 2018).  The book focuses on whether a productive activity ostensibly serving material expansion can reproduce unequal hierarchies of power embedded in and transmitted through social structures. This form of ‘inequality’ often escapes scientific measurement due to the manner in which it retains 16  While aware of the intricate debate on different forms of ‘value’ (see, e.g., Karl Marx’s Capital Volume I), I avoid it here and in the book generally as it did not serve the immediate purpose given that the main concern here is exchange value. I use ‘value’ as a shorthand for exchange value throughout the book unless another form is specified.

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its efficacy. It is structural and socially taken-for-granted (a researcher, thus, being equally exposed to its effects and failing to consider it for investigation). While both income and structural forms can be categorized as forms of ‘social inequality’, the structural form lies at a deeper level and is seldom visible to the immediate conscious awareness of the actors directly under its effects. It is also more durable given it is tied to sources of symbolic legitimacy in society that exercise an effect beyond the immediate concerns in the material world of production. Although the analysis of income inequality is simpler as a social outcome due to its computational facility, it can mostly be done (as in relation to other concepts in research) in a relational sense, that is, the quantitative modelling of inequality would require, at a minimum, a comparative study of the main sectors in the economy to have a relatively comprehensive picture of the levels of inequality in manufacturing in relation to other sectors. The scale can then be shifted to other criteria of this relation (per capita national income, sex, gender, particular regions of the country, etc.). Thus, income inequality at the individual level finds meaning in a situation where person A’s income is unequal compared to person B’s either in a direct relationship or in relation to a third criterion which would require separate research to formalize—something not within the scope of this book. Moreover, study of income inequality is pertinent in a society where objective conditions make it germane to such an analysis, that is, inequality of income cannot be superposed as an essentially similar phenomenon on all societies uniformly. In many societies extant reality makes the opportunity to earn a livelihood already a rare advantage, where talk of (in) equality of income in general terms is essentially a political preoccupation without much in the way of objective relevance—not that it should never form a social and intellectual concern but that debates regarding it are merely too soon for the society in question. The socio-structural form of inequality was more urgent and topical for an analysis of the social effects of material expansion in Kabul (2002–2018) owing to the fact that embodied socio-structural institutions remain significant determinants of social practice in general (unlike the dominance of the codified and legal sphere in many modern societies). While social structures can reinforce the perpetuation of these embodied institutions by transmitting them and can help, among its other effects, the reproduction of structural inequalities, they can also provide a normative basis for the emergence of new forms of structural inequalities. One can justify this

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research focus even based on a concern for income inequality. The structural form can result in well-entrenched hierarchies in the productive field and lead to “structural violence”17 that manifests as income inequality in material terms in the long run. Therefore, degrees of (non-)reproduction of unequal hierarchies of power embedded in social structures are relevant in contexts where the role of income inequality is yet too soon for analysis. And focus on unequal social hierarchies is warranted because of a concern for income inequality, considering that  they can lead to income inequality when the latter is made pertinent by subsequent extant conditions (a more advanced stage in capitalist development). Studying material growth alone, moreover, represents a statistical datum without revealing much detail regarding the ‘qualitative’ aspects of it, much less the processes leading to it. Production viewed from the book’s angle is not a separate ‘autonomous’ domain operating by its own logic, but is seen as inseparable from politics and culture, as these are, in turn, inseparable from the dynamics in the production field. On the other hand, judging the manufacturing sector’s growth from a purely material standpoint, I do believe it represents a ‘good’ change for Kabul’s (and by extension, Afghanistan’s) economy. To support this assertion, one can refer to the history of economic development that, granted lacking in contextual specificities, reflects a wide range of historical instances where this sector has played a vital role. In the case of Afghanistan, it is also that its economy has been traditionally dependent on primary sector production largely for the purpose of subsistence (World Bank, 2018). This is when large-scale commercial primary sector remains a less viable option in the country’s landlocked and mountainous geography with vast swathes of arid desert in the south and southeast. The rate of annual rainfall in the country, meanwhile, is low and decreased during 1960–2006, a declining trend that is predicted to continue (McSweeney et  al., 2006). It has experienced periodic droughts in recent decades, affecting agricultural yield. Additionally, its contentious geopolitics and the development stage at which it is at present—a ‘least developed country’ (UN, 2014)—make it less likely to concentrate on the tertiary sector as the main development strategy for transition away from primary sector dependence. 17  Johan Galtung (1969) uses this term to mean the forms of disparity, local or general, between what is potentially possible and what is actually attained in any historical moment with the technologies and resources present for use.

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A shift in resource allocation for reducing dependence on subsistence farming that is characterized by moving from lower to higher productivity growth might also require an increase in the role of the domestic manufacturing sector—which remains an indispensable development strategy for low- and middle-income countries even in the context of climate change (Zhang, 2011). Improving productivity in the agricultural sector is also partly dependent on the capability of the secondary sector that can use its surplus as raw material and, in turn, help in improving agricultural production techniques by supplying it with domestic capital goods, among others (Whitfield, 2012). As Albert Hirschman (1959, p. 41) maintains, the main principle guiding resource allocation should be its outcome in terms of generating income, creating new (or expanding the existing) capacities, and acting as pacesetter for further investments. These three are relatively more present in manufacturing activities, considering that they can generate labour-­ intensive employment, use agricultural surplus and secondary sector intermediate goods as raw material, and generate impact on downstream secondary and tertiary investments as a source of positive externalities (by-­ product of an economic activity in the form of an opportunity for investment to exploit by other investors—see Henderson, 1994, for elaboration on externalities). Historically, the increase in the role of the secondary sector in the economy has traditionally constituted a precursor to moving towards a complex economic configuration (List, 1846; Rostow, 1960; Gerschenkron, 1962; Kuznets, 1973; Chang, 1996). Despite industrialization becoming associated with the controversial notion of ‘modernization’ as theorized by Walt Rostow (1960), a notion that has ever since been critiqued on many grounds (see Peet and Hartwick, 2015, for a review), the basic premise remains largely intact regarding the secondary sector’s structurally transformative role in reducing dependence on the primary sector. Not only for the immediate purpose of generating material growth but, as Kuznets (1959) puts it, the “national cast” of technological advancement in a country is mediated by the “laboratory” of the industrial sector, that is, it is in this sector where a country’s technological reach is determined, and a corresponding effort obtains to either purchase it from abroad or work on domestic research and development capacity to produce it internally. In recent cases in history, the latter line of policy was adopted by South Korea and China during the 1980s when foreign sources of technological knowledge could not be relied on (World Bank, 1999).

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Primary commodities are meanwhile susceptible to frequent volatilities in prices, resulting in less secure access to foreign reserves (Chang, 2003)—the international monetary instrument for establishing trade ties with consumers and sellers in other countries. They are also subject to falling ‘terms of trade’ (ratio of the value of exports over imports). This is mainly because international demand for primary products is ‘income-inelastic’ after a certain point. It increases with rising income and plateaus where immediate basic needs, such as food consumption, are fulfilled. Hence, the increase in most primary goods exports commensurate with a rise in global income beyond this threshold is insignificant. Furthermore, primary production is characterized by ‘diminishing returns’, that is, the factors of production supplied by nature (land, fisheries, mines, etc.) have a definite capacity for return. There is a point at which applying more of the other factors (labour and capital goods) is subject to diminishing returns on each additional factor used (Whitfield, 2012). In manufacturing activities, factors of production (capital, labour, technology) are comparatively more expandable, making the resultant expansion of economic capacity relatively easier to achieve. To summarize, whilst capitalist investment is meant to increase the value of capital, the social effects inherent therein (structural inequality in this research) are important to consider. While growth in material terms can be beneficial to a country, both the material and social outcomes it can generate, based on the arguments presented above, ought to form the subject matter of research on capitalist investments—applying also to the case in hand. Moreover, it was stated that the growth of the role of the manufacturing sector has, based on historical observation, led to an allocative transformation of available material resources from a dominance of the primary sector to a relatively complex allocative regime which bears inherent qualities to expand the wealth of a society—which can apply to Afghanistan as well as a least developed economy that has traditionally been primary sector dependent. In view of the above discussion and using qualitative proxies (discussed below), the book’s findings suggest that with the implementation of the market-oriented EEA policy, habitus’ structuring effects in Kabul contributed to a structurally non-significant manufacturing sector that functioned as a mechanism for reproducing the patriarchal family hierarchy of power within the field of production.

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To argue thus is in a way also to call for its opposite (state-bureaucratic intervention in resource allocation) as an alternative. The significance of state intervention increases the higher the chances of habitus’ exposure to manufacturing is estimatedly low in any context. The intervention can adjust resource allocation to this limitation with an eye for the development of the manufacturing sector. How this intervention should be in concrete detail is secondary to this book’s concern. The nature of such intervention, whether informational or material (or a combination of both), direct or indirect, could be a topic of future research (I return to this point in Chap. 9, Sect. 9.5.). Such an intervention could not only target material growth but also the social effects that obtained in Kabul’s manufacturing sector in the form of reproducing the patriarchal hierarchy of power, for which future research could study the legal form that distinguishes the right-obligations structure that determines, among others, the rules governing corporate governance.

1.3   Qualitative Proxies of Significance (QPS) Due to the limitations that make a comprehensive comparative study of the Afghan economy in its entirety not feasible at present, the four indicative proxies in the book based on the empirical data deduce manufacturing sector’s emergent place in the Afghan economy—when all are considered in combination. The function of these proxies is indirect: they point to a compositional shift in the structure of the economy based on growth in size of the manufacturing sector. To draw an analogy, it is a localized viewpoint from an ‘organ’, examining the changing processes within to deduce how important it might be in the general economic ‘anatomy’. In societies dominated by earlier forms of sustenance, mainly one form of work predominates in the economy, characterizing its ‘anatomy’. This socio-economic configuration becomes relatively complex when other forms of provisioning are adjoined as additional organs to the economic anatomy. For example, in agrarian societies with vestiges of hunting and gathering still lurking in the margins, the anatomy of society’s economic structure (how it allocates its material resources) was and is characterized by one dominant organ. The more a shift takes place towards post-­agrarian manual industry and agricultural processing techniques, the more complex the economic anatomy becomes. New organs tend to grow with new functions, and as the historical progress proceeds to the stage of collective production based on division of labour, the workshop and then the

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manufacturing system, intermediate sub-organs within the already existing organs proliferate and multiply. Each organ and its sub-components perform various functional tasks, are configured, and develop in ways that can, by the intrinsic properties of their functions and the relation of their configured state with those lying outside them, reveal the place they hold in the anatomy by certain provisional indicators or proxies. Some of these proxies are used in this research to assess manufacturing as an ‘organ’ in Afghanistan’s economic ‘anatomy’. Perhaps an easier route would have been to study the distributional share of this sector in the aggregate labour force to come to a relatively accurate measure for its size in the economy or the more commonly used index of proportional share in Gross Domestic Product (GDP). But in Afghanistan’s case this can be misleading given the scarcity of adequate statistical data in the context.18 Moreover, numeric data does not reveal qualitative shifts. In an extreme scenario, a large manufacturing share in the GDP might be entirely in the form of foreign direct investments in tax-free zones without having spill-over effects on the rest of the economy (e.g. employment generation, local content), in which case the host country will, on balance, lose out in the form of environmental degradation despite the rise in GDP.  Alternatively, the sector might have developed because of an increase in purchasing power due to inflow of unprecedented financial aid without having developed structural ties with the rest of the economy (more the case in Afghanistan). On the other hand, the qualitative proxies of significance (QPS) in the research—in a qualitative/compositional sense as was analogically suggested by comparison to an organism in an anatomy—deduce tendencies suggesting manufacturing sector’s growth in Kabul’s economy. As such, the exact statistical measures of these signs are less the focus than their mere genesis—this genesis explained here through an analysis of the empirical data regarding the three RQs. Empirical signs of the birth of an organ in an economic anatomy (e.g. manufacturing) can show whether it has become structurally significant owing to its growing size, that is, whether it determines the way the anatomy functions by it gradually becoming an undeniable objective reality, attracting resources towards itself, and growing sub-units within. Bearing in mind that the QPSs help 18  To illustrate, the country still relies on estimates of its population (see Afghanistan National Statistics and Information Agency, 2019) and had not conducted a survey to gather even this elementary economic data.

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the analysis based on data about one sector, they are deductive in their method of inference. The four QPSs I identified in Kabul are: 1. Horizontal mobility of capital: The first QPS shows the movement of financial capital into and within Kabul’s secondary sector. This movement reveals a shift in the overall structure of the economy as a result of a growth in the size of manufacturing. The sector shows to have become structurally significant as an objective reality that the knowledge regarding its presence can structure individual habitus beyond those who are already investors or were exposed to it through their lived experience. One important sign of this shift in the economy is flow of capital into manufacturing activities from sources other than the manufacturing investors’ personal and familial wealth or borrowings made possible through social relationship. This flow can take many forms, including credit from commercial banks, joint funds and other investment institutions, domestic and foreign. Within the sector, horizontal mobility of capital refers to the extent to which physical assets are amenable for liquidation to some degree for re-allocation either inside the sector in other investments or exit from the sector. This property suggests growth in size because it requires the emergence of a capital goods market (i.e. market for all the tools, parts and machines that are purchased by manufacturing companies), the latter, in turn, becoming a possibility when adequate demand makes it necessary. Such a market permits the purchase and sale of physical investment assets, hence permitting liquidation of physical assets to some degree for the capital invested in them to get re-allocated as investments in another activity within or without the secondary sector. These twofold movements, inflow of financial capital and re-allocation or exit following entry, are used as one QPS in conjunction with others to deduce the emergent size of manufacturing sector in Kabul’s context. 2. Inter-sectoral vertical expansion: The second proxy focuses on the property of growing inter-sectoral or inter-industrial demand as an inducement for investments in manufacturing. This I call vertical sectoral expansion, which indicates the size of manufacturing sector through division of labour based on specialization inside the secondary sector. In practice, this takes place through backward and forward linkages, that is, new production units established to use existing domestic goods as input, or to produce intermediate goods for units already present in the sector and others who might prospectively make an entry

1 INTRODUCTION 

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into it (see Hirschman, 1959 for more detail). This property points to whether particular industries have grown large enough that new units are established to produce intermediary goods for them, or whether the industrial sector has become sophisticated enough to use domestic finished goods as intermediate commodities. 3. Impersonal exchange: Impersonal exchange shows a tendency towards an increase in the size of an industry within manufacturing sector in the sense that person-to-person negotiated transactions for each product of this industry would begin to incur more costs and become more time-­ consuming given the increasing frequency of sales. Meanwhile, a gradual shift away from order-based production to pre-order production and supply follows a similar logic, that is, negotiating orders for each separate item begins to incur a higher time and financial cost owing to an increase in the number of sales. . Bureaucratic governance structure: The development of bureaucracy 4 within the unit, with sub-units in charge of specialized duties and decision-­making, is a shift away from a personalistic structure of governance. This criterion demonstrates size of units in the study based on the rationale that with gradual increase in the volume of operations, specialized sub-units begin to handle internal routine duties of the production unit19 (e.g. financial management, human resource management, marketing, quality control, production monitoring, public relations and logistical coordination). A single individual in such a setting would be incapable of maintaining physical propinquity and supervision on the totality of the production process due to physical constraints, among other reasons. A personalistic governance tends to reduce gradually in its range with a rise in the number and scale of activities, consequently leading to a more complex and rationally planned inter-unit bureaucracy.

1.4   Research Significance Critical examination of the EEA allocative regime in Kabul related to the development of manufacturing sector, with analytic depth concerning the study period (i.e. more than generic reports by IFIs, government agencies 19  I will use this to refer to a single self-sustaining production site, forming a single entity or one out of many entities comprising a ‘company’ or corporation.

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and NGOs), has not been undertaken to my knowledge. This is where the book aims to contribute, particularly concerning the debate on the adoption of a non-intervention regime for resource allocation in a context like Kabul (2002–2018). The book’s topic is approached with a developmental concern in mind with the belief, echoing Bourdieu (1984, preface to the English edition), that a study of the “singularity of an object” does not preclude the “ambition of drawing out universal propositions”. Among the multiplicity of variables that can condition and produce diversity in objective experience in different places, one can find invariable commonalities that I believe are useful as guides if not guidelines for current and future research and policy. The epistemological approach—the application of Bourdieu’s habitus, field, forms of ‘capital’—in the context of manufacturing activities in Kabul can contribute to debates on institutionalized human ‘rational’ practice in a context that has not been investigated with this theoretical lens. The mode of exposition considers the particularities of one case in the context of a debate—market-oriented economic policy—that can be relevant to other such cases at present and in future. Lastly, concerning the choice of sector, manufacturing in addition to its developmental value is one important object of research for detecting transformations in a pre-industrial society towards attaining a relatively complex social formation based on modern industry (see Callinicos, 2012, for elaboration). Examination of this mode of subsistence illuminates other aspects of social reality in the context directly related or indirectly interconnected with it, in some ways also shedding light on the stage at which economic development finds itself in Afghanistan. Afghanistan witnessed a comprehensive push towards a capitalist transformation during 2001–2021. The study of manufacturing activities during the study period derives its importance, hence, as an entry point to deduce relevance of other areas of study—albeit for future research—often beyond merely an explanation of the subject matter itself. Some of the areas for future research will be enumerated in the book’s conclusion.

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1.5   Note on Geographic Focus Kabul province, in addition to being Afghanistan’s capital and largest city by population,20 witnessed the highest number of private business registrations—54 per cent of the aggregate country figure—during the study period21 based on Afghanistan Central Business Registry & Intellectual Property (ACBR-IP)22,23 (see Fig. A2 in the appendix). Business registration under this bureau during Afghanistan’s former republican system indicated geographic location because ACBR-IP offices in Kabul and the other 21 provinces (of the country’s 34 provinces) issued licences only if the business fell under their geographic remit. I should remind the reader that all the businesses registered in Kabul were not necessarily active and the data shown here should be treated as an accumulated number of licences issued in the post-2001 period (until March 2018 when it was accessed). Although business closure required ACBR-IP’s approval, data regarding these closures were rarely recorded. Even then, Kabul far outstripped other provinces next in line in the percentage of business licences to warrant the suggestion that it had attracted the overwhelming share of private investments in Afghanistan during 2002–2018—more than half the national aggregate. In view of this, Kabul’s manufacturing sector also reflected the relative ideal of the ‘possible conditions’ in the country, also illustrative of other less conducive conditions in other provinces. To return to the two political economy determinants, the economy of Kabul, meanwhile, was affected by the anti-government militant insurgency and the market-oriented model. Not all of Afghanistan was affected by the insurgency in the same way, and in Kabul’s case it was seen mostly in ground engagements between anti-government militants and government security forces, improvised explosive devices (IEDs), and suicide and

20  Kabul’s population was approximately 5 million in 2019 based on a government estimate (Afghanistan National Statistics and Information Agency, 2019). The provinces next in line were Herat (2.1 million), Nangarhar (1.7 million), Balkh (1.5 million) and Helmand (1.4 million). 21  Provinces next in line were Herat, Kandahar, Nangahar, Nimruz and Balkh, responsible for 10 per cent, 8 per cent, 6 per cent, 6 per cent and 5 per cent of private business registrations respectively. 22  Accessed on 13 March 2018. 23  A bureau under the former Afghanistan Ministry of Commerce and Industry (MoIC).

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complex attacks.24 In reports by the United Nations Assistance Mission for Afghanistan (UNAMA) on civilian casualties in armed conflict in Afghanistan in 2016, 2017, 2018 and 2019, Kabul consistently figured as the most affected city compared to other provinces in the country (UNAMA, 2016, 2017, 2018, 2019). The city, under Afghanistan’s highly centralized political administration,25 followed the market-oriented EEA model, making it a ‘conflict-affected market economy’.

1.6   Reason for Focusing on Private Sector Investments Prior to the study period, manufacturing activities in Afghanistan using modern machinery were mostly state-owned or state-run or, if any private sector investments existed, they were not registered—running informally according to official business registration data. According to an Afghanistan Ministry of Finance (MoF) report shared with me, a total of 76 public enterprises and corporations existed in Afghanistan in the pre-2001 period (mostly active prior to the early 1990s onset of civil war), out of which 64 enterprises covering primary, secondary and tertiary sectors had survived this period by early 2002. Of these, three were privatized and 23 were liquidated in 2005. According to a 2013 IMF advisory note to the Afghan government, at the time 30 state-owned enterprises (SOEs), 13 state-­ owned corporations (SOCs) and 20 inactive state-owned entities existed in the country. The SOEs are entirely owned by the state and the state’s share in SOCs ranges between 20 and 100 per cent. The share of SOEs in GDP was 0.6 per cent based on the same report. All secondary sector enterprises were among the inactive entities, relying on renting out their assets (mainly land and buildings) for the revenue they reported to the Ministry of Finance (MoF). These entities never resumed their activities in the post-2001 period. Research on manufacturing activities in Kabul covering 2002–2018, therefore, had only private sector investments as the objective field for empirical data. 24  Involving a combination of suicide attacks or IED explosions parallel to, preceded by or followed by ground engagement by anti-government militant groups. 25  The post-2001 political system in Afghanistan was a unitary centralized presidential system (Malikyar and Rubin, 2002). Provinces, including its capital Kabul, follow the policies and regulations that were set by the central government without any juridical exceptions regarding specific territories.

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Disaggregated data show that manufacturing licences issued in the post-2001 period numbered at 5646 by 13 March 2018, when the ACBR-IP registry records were accessed. Among these, 2250 (39.9 per cent) were registered in Kabul among whom only 44 had done so between 197026 and 2001. Hence, 98.0 per cent of private investments in manufacturing were registered in the post-2001 period. This fact supports the book’s premise, to the effect that knowledge of manufacturing as a professional possibility was mostly limited to SOEs and SOCs prior to 2001 and largely did not exist as a professional possibility for private individuals.

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Rubin, R. B. (2004). Crafting a constitution for Afghanistan. Journal of Democracy, 15(3), 5–19. Rubin, R.  B. (2006). Peace building and state-building in Afghanistan: Constructing sovereignty for whose security? Third World Quarterly, 27(1), 175–185. Rutherford, M. (1994). Institutions in economics, the old and new institutionalism. Cambridge University Press. Salerno, J. (1990). Postscript. In L. Mises (Ed.), Economic calculation in socialist commonwealth. Mises Institute, Auburn. Samuelson, P. (1967). Economics (7th ed.). Mc-Graw hill. Screpanti, E. (1999). Capitalist forms and the essence of capitalism. Review of International Political Economy, 6(1), 1–26. Sen, A. (2000). Development as freedom. Alfred A. Knopf, Inc. SIGAR. (2014). July quarterly report to The United States Congress. Retrieved November 10, 2016, from https://www.sigar.mil/pdf/quarterlyreports/ 2014-­07-­30qr.pdf#page=15 Smith, S. (2011). Afghanistan’s troubled transition. Viva Books Private Limited. United Nations. (2014). Country classification. Retrieved July 31, 2020, from https://www.un.org/en/development/desa/policy/wesp/wesp_ current/2014wesp_country_classification.pdf United Nations Assistance Mission for Afghanistan. (2016). Afghanistan: Protection of civilians in armed conflict annual report 2016. Retrieved November 10, 2016, from https://unama.unmissions.org/sites/default/ files/protection_of_civilians_in_armed_conflict_annual_report_2016_ final280317.pdf United Nations Assistance Mission for Afghanistan. (2017). Afghanistan: Protection of civilians in armed conflict annual report 2017. Retrieved February 13, 2020, from https://unama.unmissions.org/sites/default/files/afghanistan_protection_of_civilians_annual_report_2017_final_6_march.pdf United Nations Assistance Mission for Afghanistan. (2018). Afghanistan: Protection of civilians in armed conflict annual report 2018. Retrieved February 13, 2020, from https://unama.unmissions.org/sites/default/files/unama_ annual_protection_of_civilians_report_2018_-­_23_feb_2019_-­_english.pdf United Nations Assistance Mission for Afghanistan. (2019). Quarterly report on the protection of civilians in armed conflict: 1 January to 30 September 2019. Retrieved February 13, 2019, from https://unama.unmissions.org/sites/ default/files/unama_protection_of_civilians_in_armed_conflict_-­_3rd_quarter_update_2019.pdf Wacquant, L. (2016). A concise genealogy and anatomy of habitus. The Sociological Review, 64(1), 64–72.

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CHAPTER 2

Literature Review: New Institutionalist Economics (NIE)

To understand what the World Bank means by market institutions, it is important to delve deeper into North’s and some other important work in NIE to grasp the analytical ‘institution’ in this tradition. This is intended, more urgently, for two purposes here: (a) the theoretical point of departure in this tradition and (b) the underlying ontological assumptions. How the analytic concept of ‘institution’ takes shape, what it says and what it excludes, and its application in research and policy has a lot to do with the above two elements. This is not a comprehensive review of all that is associated with and applies an NIE framework, and only deals with the above two elements insofar as discussed in some theoretically significant NIE literature (some commonality is assumed in these core assumptions among thinkers associated with this tradition, otherwise it wouldn’t be a tradition). The effort here is, therefore, to go some way in gleaning core theoretical-epistemological principles in NIE.  This review plays another important role: to help develop a theoretical framework that builds on the critique in this chapter. The NIE research paradigm—with the attendant effects of a paradigm on research (see Kuhn, 1960)—is to a good extent delineated in broad terms by the following quote: The neoclassical result of efficient markets only obtains when it is costless to transact. When it is costly to transact, institutions matter. And because a large part of our national income is devoted to transacting, institutions and © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 K. Rafi, Patriarchal Hierarchy, https://doi.org/10.1007/978-3-030-98407-6_2

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specifically property rights are crucial determinants of the efficiency of markets … How does this new institutional approach fit in with neo-classical theory? It begins with the scarcity hence competition postulate; it views economics as a theory of choice subject to constraints; it employs price theory as an essential part of the analysis of institutions; and it sees changes in relative prices as a major force inducing change in institutions. (North, 1993)

The origins of investigating ‘transaction costs’ can be found in OIE, more specifically John R. Commons’ work (Rutherford, 1994). However, the adoption of this analytic tool in NIE is often traced back to Ronald Coase’s essay The Nature of the Firm (1937),1 in which the issue of resource coordination within the hierarchy of a firm is debated as a shortcoming in rational choice-based economic theory (‘rational choice economics’ or RCE hereafter).2 To Coase, assuming away intra-firm coordination eschewing the price mechanism and the assumption of frictionless inter-firm exchange us inadmissible. Both the issue of deliberate coordination within the firm and the intermedial relationships that are formed between persons and a firm or between different firms are absent in RCE, the transactions among these agents and firms assumed as instantaneous and taking place in a ‘frictionless’ environment. Coase argued that on the supply side purchase of factors of production requires “contracts” for each separate deal, which results in legal and time costs incurred by the “entrepreneur” (i.e. purchaser). This cost is reduced by establishing a contract with the supplier of a factor of production (most often labour), which creates a “firm” between the entrepreneur and a multitude of such factors—the raison d’etre of a firm according to him. Subsequent allocation of these contracted factors is managed based on the conscious “control” and planning of the entrepreneur. Another essay by Coase, The Problem of Social Cost (1960), discussed the problem of law and the property rights structure, as well as their relationship to market exchange. Here, Coase proposed the priority of optimal allocation—the increase in the aggregate utility—as an appropriate basis for legally appraising social costs such as externalities. These two essays are often cited as foundational texts for NIE (e.g. by North, 1990, 1993). The wider research area associated with NIE has thus evolved concerning market transaction costs that are mediated by “informal3 (sanctions, taboos,  Coase himself claims as much in an essay he wrote in 1998 (see Coase, 1998).  A more detailed explanation of the ontological and epistemological assumptions of this tradition is provided below. 3  I will use “formal” and “informal” within quotation marks to follow this categorization until I introduce other terms as alternatives. 1 2

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c­ ustoms, traditions and codes of conduct)” and “formal (constitutions, laws, property rights)” institutions (North, 1991). Some of the areas of inquiry in this tradition include the institutional variation across historical experience of different nations as a way to explain higher or lower levels of currently experienced material prosperity (see North, 1990, 1991; Acemoglu et al., 2001), legal-representational requirements of capitalist development (De Soto, 2000), the hierarchy-market combination in resource allocation (Williamson, 1973), problems associated with collective action (Ostrom, 1998; a seminal pre-NIE text but contributing to it on this topic is Mancur Olson’s 1960 book The Logic of Collective Action; see also Putnam, 1993), common pool resource management (see Ostrom, 2005, 2007, for a summary of her work), and macro-level institutional pre-­requisites for transforming an economy heavily dominated by stateowned enterprises to one governed by market-based allocation (Mickiewicz, 2010). In this context, the ‘right’ set of institutions for bridging the gap between the “developed” and “undeveloped” parts of the world forms NIE’s main contribution to economic development (Shirley, 2005). The idea of “contract” and rule-based practice is sine qua non to the genesis of the idea of institutions in this tradition, propelling the formation of a semantic trajectory for this concept that understands it as “humanly devised constraints that structure political, economic and social interactions” (North, 1991). According to Williamson (2005), the distinguishing feature of NIE is its adoption of exchange contracts as its theoretical lens rather than prices, output and choice (Williamson, 2005). The “calculative approach” in NIE’s epistemology (Williamson, 1993, 2000) views rational choice theory in assuming human social practice as informed by innate self-seeking utility maximization, but with two modifications (Menard and Shirley, 2005): human rationality is ‘bounded’ and the information available to an individual is incomplete, an idea first introduced into rational choice theory by Herbert Simon. Simon attempted a revaluation of the assumption of “complete” knowledge of preferences of the “economic man” (the man he thought was too good to be true). By placing her/him in the “environment of choice” he argued that because of the “psychological limits of the [human] organism”, human rationality in how it really manifests is an “extremely crude and simplified approximation” of the kind of universal rationality that is usually attributed to him/ her by rational choice theory (Simon, 1955). Because of bounded rationality and incomplete information, humans face uncertainty, and to reduce

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it they establish institutions for which they pay a transaction cost (Menard and Shirley, 2005). Investigating institutions, therefore, helps in some way in the effort to investigate levels of existing transaction costs in a society affecting productivity. This thinking orients the main ‘level of analysis’ of NIE, as stated by Williamson in his important paper The New Institutional Economics: Taking Stock, Looking Ahead. Williamson divides the ‘levels of analysis’ in the study of resource allocative regimes into four: Level 1. Norms, customs, mores, religion, traditions, etc. Level 2. Institutional environment: formal rules of the game—esp. property (polity, judiciary, bureaucracy) Level 3. Governance: play of the game—esp. contract (aligning governance structures with transactions) Level 4. Resource allocation and employment (prices and quantities; incentive alignment) (Williamson, 2000)

He contends that level 1 (the “social embeddedness level” according to him), although studied by some economic historians and social scientists, is assumed as “given” in NIE by taking human behavioural disposition as ‘boundedly rational’. Level 1 institutions are “shadows of the past” that constrain “executive, legislative, judicial, and bureaucratic functions of government”. NIE, at least according to how Williamson might prefer, is principally concerned with levels 2 and 3. In policy terms, the World Bank World Development Report 1997: The State in a Changing World encapsulates this thinking concerning institutions in the following passage: “… rules of the game that facilitate entry and competition, and a complementary institutional, legal and regulatory framework that undergird property rights and markets …” (Chhibber et al., 1997). The legal approach undergirding the above statement had already flourished as part of a research project during the 1960s (Williamson, 2000), described succinctly by Coase: “a private enterprise system cannot function properly unless property rights are created in resources”, by which “… chaos disappears; and so does the government except that a legal system to define property rights and arbitrate disputes is, of course, necessary” (Coase, 1959). Once property rights are assured, the task of resource allocation is handled by the self-regulating “marvel” of markets, as Williamson puts it (2000), in an allusion to Hayek’s notion of price signals (1945). As pointed out in Chap. 1 Sect. 1.1., for the markets to come about, it is suggested that state governance institutions be

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“conditioned on stable, solid constitutional frameworks” (Olson as quoted by Mickiewicz, 2010, p. 49), acting as constraints on the executive branch arbitrariness. In developing country contexts, Mary Shirley proposes two sets of institutions that support “market economy” through, firstly, fostering “exchange by lowering transaction costs and encouraging trust” and, secondly, by influencing the “state and other powerful actors to protect private property and persons rather than expropriate and subjugate them”. The first set consists of “contracts and contract enforcement mechanisms, commercial norms and rules, and habits and beliefs favouring shared values and accumulation of human capital”. The second set consists of “constitutions, electoral rules, laws governing speech and education, and norms that motivate people to abide by laws and cooperate in monitoring government” (Shirley, 2005). Seeing a correlation between law and capitalist development can be traced back to the ideas of Max Weber (Rajagopal, 2008), in whose sociology of law the relationship between the development of the capitalist system and a “formal rational administration of justice” in the legal order can be witnessed (Weber as quoted in Ewing, 1987). Conversely, reversing the law-to-capitalism sequence in Weber’s thought, one school of political philosophy in the latter half of the twentieth century, promulgated mainly by Robert Nozick and James Buchanan, saw the emergence of the state and its legal apparatus, instead, as a market-like contractual solution to provide the public good of law and order (Chang, 2002). There also emerged a school of “economic analysis of law” (or Law and Economics) in the Chicago School of Economics, inspired by Ronald Coase’s (1960) aforementioned essay, which applied (and continues to apply) analytical tools derived from rational choice economics to study laws based on their (un)suitability to “economic efficiency” (see Friedman, 1987, for an example of this thinking). As stated by Coase himself (2005), this academic attempt is meant to study ways of re-assigning (or making a transfer within) the rights system based on a legal framework that formulates and enforces property rights in ways wherein rights are granted to those who can make more “productive” use of them. The relationship between law and capitalist development is given cogent support by Hernando De Soto’s The Mystery of Capital (2000). De Soto argues that “property rights” are not the physical assets themselves but the manifestation of a communal consensus that, once formalized in written codes, makes buying and selling of these assets easy and fungible

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(mutually interchangeable without exactly comparing the physical specificities of the assets regarding how they appear objectively). This he refers to as a collectively agreed upon “representation system” recognized by law: … it is law that detaches and fixes the economic potentials of assets as a value separate from the material assets themselves and allows humans to discover and realize that potential. It is law that connects assets into financial and investment circuits. And it is representation of assets fixed in legal property documents that gives them the powers to create surplus value. (De Soto, 2000, p. 234)

Legal reforms based on political action do not work in developing countries, argues De Soto (2000, p. 181), because top-down “mandatory laws” do not take into account communal “social contracts”. His belief is that the real challenge for development along a capitalist model (which he extols as the “only game in town”) is to bring all “scattered” legal systems under one common system of representation. The other important component of NIE’s epistemology (perhaps most relevant to the book’s policy contribution; see Chap. 9, Sect. 9.3.) is a historical analysis of institutional change characterized by taking “path dependency” as a recurring ‘epistemological-methodological framework’ (see Schuurman, 2003, for a critical review). Path dependency shifts the methodological plain from immediate differences to past decisions in an attempt to explain current material differences among nations based on the effects of these decisions (see North, 1991, 2005; Putnam, 1993; Shirley, 2005; Acemoglu and Robinson, 2012). North (2005) locates the source of path dependence in the “belief systems” of political and economic “entrepreneurs” in shaping an institutional trajectory in an original act in a society’s history, taken in important moments where choices are made for creating the elaborate structure of norms, conventions, rules and beliefs embodied in constitutions, property rights and informal constraints, which tend to “shape economic performance”. Subsequent choices made by political and economic “entrepreneurs” tend to abide by the immediate limitations of technology and income but also, it is believed (North, 1990, 2005), by the limits imposed by the original institutional “scaffolding”. Adoption of path dependency is also partly the reason that important literature within the NIE framework shows a preoccupation with political institutions. According to North (1990), political institutions are one

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important area of research for NIE considering that their performance for the protection of private property and enforcement of contracts, among others, affects transaction costs. North suggests that a state’s enforcement of property rights and a non-arbitrary legal framework is among the reasons why some past societies have experienced higher levels of trade and productivity. However, as per Menard and Shirley in the introduction to the Handbook of the New Institutionalist Economics (2005), one central question for NIE research is whether a state might also grow too powerful to attempt to expropriate private property and undertake other such arbitrary interventions. Thus, investigating the “balance” between a state that is powerful enough to guarantee property rights and contract enforcement while remaining sufficiently minimal (confined to public goods provision) to decrease the chances of expropriation and other such arbitrary acts constitutes one major debate and an intellectual contribution of NIE to development theory, according to Menard and Shirley. The book Why Nations Fail by Acemoglu and Robinson (2012) combines path dependency and the right institutional ‘balance’ in a comparative study of the United States and Mexico as examples of what the authors call “success” and “failure” respectively, tracing the origin of their differential status mostly in the distinction between the spirit of legalism predominant in late medieval Britain and the top-down authoritarianism of the Spanish crown from which they were respectively conquered. Their main policy contribution highlights the role of institutions that ensure “inclusivity”— the type that by design extends opportunities4 for all members of society in all walks of social life, which leads to ‘success’ in the long run. In the opposite direction lie “extractive institutions” (associated with failure), which by design limit access to common goods to a few in society. Adoption in the past of any of the above form of institutional models is said to underpin present differences in economic well-being in different societies. Enforcing “good” institutions is therefore predicated on laws that guarantee private property and a market economy, which are said to form inclusive institutions. As a political economy model, the authors advocate “inclusive state institutions” which are centralized in their legal-­ jurisdictional aspect but pluralistic in regard to the beneficiaries of public goods, versus “extractive state institutions”, which are neither centralized nor pluralistic. 4  Not provide guarantee for participation through active empowerment, which is a radically different approach.

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As an epistemological note connected to the above notion, North places the “evolution” of political and economic institutions as the central issue of economic history and development (1990, p. 21, 1991, 2005), pointing out the utility of “evolutionary biology” rather than static models in physics to understand economic processes. He posits that inheritance of traditions, variation through mis-adaptation (when learning traditions), rational thinking and imitation are significant elements within the socio-economic evolutionary model (1990, pp. 19–21), with one proviso that in biological models of evolution the “selection mechanisms” are not informed by “beliefs about the eventual consequences of choices or decisions”. Whereas in economics, the process of institutional evolution should be seen as guided by perceptions of the players with the “intent of producing outcomes downstream that will reduce the uncertainty of the organizations’—political, economic, and social—pursuit of their goals”. All institutional change, formal and informal, is therefore a “deliberate process” (North, 2005): “Incremental change comes from the perceptions of the entrepreneurs in political and economic organizations that they could do better by altering the existing institutional framework at some margin” (1990, p.  7). The immediate motive (i.e. incentive) for institutional change taking place for humans engaged in the process is to improve their odds in a competitive field. The immediate objective of the organizations engaged in the “game” is profit maximization, while the ultimate objective is the survival of the organization. The main motor of institutional change or emergence is therefore competition. Institutional changes are caused by the pursuit of maximum payoffs by actors who work for competing organizations. According to North: When competition is muted (for whatever reasons) organizations will have less incentive to invest in new knowledge and in consequence will not induce rapid institutional change. Stable institutional structures will be the result. Vigorous organizational competition will accelerate the process of institutional change. (North, 2005, p. 23)

This change can take any number of forms depending on the institutional matrix (which determines the opportunity set). “Maximum” return is defined by the incentive structure in an economy, which is also crucial in directing the resources for acquiring new knowledge and skills. Based on North’s theorization, because the “human landscape” involves uncertainty, within which daily decisions are taken based on perceived

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payoffs, humans acquire information to reduce the uncertainty, the cumulative pool of this knowledge acquired and normalized over time constituting culture itself (North, 1990, 2005). “Where do informal constraints come from? They come from socially transmitted information and are a part of the heritage that we call culture … culture provides a language-­ based conceptual framework for encoding and interpreting the information that the senses are presenting to the brain” (North, 1990, p.  37). “Making sense” is the first level of learning based on a mental architecture that structures and gives meaning to sensory cultural input, according to North, generating an “event space”5 which receives data from experiences that involve the physical environment and the socio-cultural linguistic environment. The event space structure consists of “categories and classifications” that are based on a learning process beginning from early childhood to organize individual perceptions. North conceives institutions as manmade structures that help reduce uncertainty in the “human landscape” (North, 2005). Subjective mental models and ideology play important roles in shaping individual choices within this landscape (North, 1990). Three underlying elements are identified through the interplay of which the economic performance of a society is thought to be shaped: demography (the composition and quality of a country’s population), the aggregate knowledge of the society (including beliefs) and institutional framework. Within the aggregate knowledge, “beliefs and the way they evolve are at the heart of understanding the process of change” in a society’s institutional makeup (North, 2005). “How well institutions solve the problems of coordination and production is determined by the motivation of the players (their utility function), the complexity of the environment, and the ability of the players to decipher and order the environment (measurement and enforcement)” (North, 1990, p.  34). The durability of certain institutions over time, meanwhile, is explained by applying an equilibrium model, that is, the parties to the exchange facilitated by the existing set of institutions might not see an advantage in initiating a process that would change the institutional equilibrium (North, 1990, p. 86). 5  This concept is similar to Bourdieu’s concept of habitus. However, North does not acknowledge this either due to wilful omission (as is also common in regard to another term that Bourdieu played the main role in conceptualizing, social capital, in some mainstream usages of the term), or because he has come to the same understanding much later than Bourdieu. In any case, it does not seem to have played a prominent role in North’s (or NIE’s) institutionalist method.

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North (2005, p.  26) writes that formal rules are only ‘blunt instruments’, that is, changing formal rules based on a “correct” understanding of what it takes for the economy to perform well is not adequate because economic performance depends on an admixture of formal rules, informal norms and their enforcement characteristics. He adds that “changing only the formal rules will produce the desired results only when the informal norms that are complementary to that rule change and enforcement is either perfect or at least consistent with the expectations of those altering the rules” (North, 2005, p.  28).6 In a passage that succinctly frames North’s contribution to the formulation of EEA, he writes: “creating an institutional environment that induces credible commitment entails the complex institutional framework of formal rules, informal constraints, and enforcement that together make possible low-cost transacting” (North, 1990, p. 58). To summarize, NIE’s institutionalist concern has worked back from an original concern, that of transaction costs, leading to the study of contracts and their role in economic development based on a market-based allocative regime. Investigating institutions, formal and informal, with respect to how they facilitate or impede market-based transaction and thereby an allocation of resources through this mechanism, forms the main thinking approach regarding institutions in NIE.  As a theoretic-­ normative assumption of NIE regarding the economy, Menard and Shirley point out in the introduction to the Handbook (2005) that “the performance of a market economy depends” upon formal and informal institutions and the modes of organizations embedded in them that facilitate private transactions and cooperative behaviour. Attention to level 1  in Williamson’s levels of analysis is not entirely abandoned in NIE theoretical texts, but only to the extent that it fits the epistemology of seeing institutions as a ‘constraint’. As North puts it: if at the macrolevel of cultural inheritance we still know very little, we can say more about changing informal constraints at a microlevel … changes in relative prices or tastes may result in such constraints simply being ignored by common consent and then withering away. In terms of the focus of this study, a major role of informal constraints is to modify, supplement, or 6  This viewpoint can become the ideological articulation of deep marketization (see Caroll, 2012, for a discussion of the term) if used in a pro-market development policy, much as it can also provide the reasoning for other fundamentalist policy approaches of the kind not fully aligned with NIE’s commitments at the policy level.

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extend formal rules. Therefore, a change in formal rules or their enforcement will result in a disequilibrium situation, because what makes up a stable choice theoretic context is the total package of formal and informal constraints and enforcement aspects. (North, 1990, p. 87)

2.1   The Methodological Constants of an Ideal Market It is worth taking a step back from the notion of ‘bounded rationality’ as an approach to the study of human economic behaviour, to study the more ‘global’ (as Simon calls it) form of rationality to which the ‘bounded’ form sees itself as a necessary complement. This exercise is warranted as it takes the discussion of human behavioural disposition to its purely ‘utility-­ maximizing’ abstract form, from which NIE derives its pre-given unit of analysis. North (1990) states that “institutions define and limit the set of choices [emphasis mine] of individuals” (North, 1990, p.  4), suggesting that by theorizing ‘choice’ in the establishment of institutions, a theoretical field can emerge that brings neo-classical ‘choice- theoretic’ epistemology into the study of a major topic in all social sciences. It is worth examining this conception of choice, and how it might bear upon the idea of markets and resource allocation, before moving on to an understanding of the institutions of a market economy (i.e. EEA) as devised by the World Bank. Before we move on to this section, I should note that how a ‘market’ appears in reality is structured by the “rights-obligations structure” underlying the context of this exchange, which makes each marketplace context different from the other (Chang, 2002). The market economy in France and the Netherlands, for instance, is different from the market economy in China and the United States in important ways. Keeping this variability of real experiences in mind, the attempt here is to simply sketch the ideal theoretical orientation of all institutional settings that are inclined towards or actively pursue a ‘market economy’, not delineate the nuances and their differential extant objective details. To begin, the ontological assumption in the mainstream theory of markets relies on a few core beliefs regarding human nature underlying an individual’s choice and the way to understand human social practice, referred as ‘rational choice theory’ (RCT hereafter). The theory relies on seeing human social practice tending towards ‘self-interest’ (for a critical contribution see Simon, 1955; for a general discussion see Easley and

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Blume, 2008, p. 11559; in the context of market exchange see Rittenberg and Tregarthen, 2009; for its application in various social domains in addition to production and exchange see Becker, 1973). The epistemology derived from this approach views the content of the individual’s self-­ interestedness as ‘utility maximization’. The concept of utility in one of its first coherent articulations was put forward by Jeremy Bentham, as: The principle that approves or disapproves of every action according to the tendency it appears to have to increase or lessen—i.e., to promote or oppose—the happiness of the person or group whose interest is in question. (Bentham, 1789, p. 7)

The concept also entails an understanding of the individual as capable of exercising her/his preference in relation to a set of alternative utility options (e.g. the utility of apples vs pears). And the choice among these alternative options is transitive, that is, if apples to her/him are better than pears and pears are better than oranges, then to him/her apples are better than oranges. Problems having to do with measuring utility derived from each option and the comparison of utility, in method and public policy, have led to some adjustments in computation (considering that the satisfaction derived from utility is personal and subjective). The effect of this is that the choice of one over another option itself has come to be seen as a product of a utility-driven desire, this mere act being seen as the manifestation of the higher utility the individual intends from choosing one over another option regardless of the consequence in terms of happiness (for a critical review, see Sen, 2000). The theory also ex-ante assumes ‘complete preference’ on the part of the decision- making individual, that is, the person can always say which of the binary alternatives they prefer or whether any option is preferred (Easley and Blume, 2008, p. 11561). Such choice of preference in a unit of transaction is based on a further important assumption, that of symmetrical access to information between the economic agents involved regarding the utility options (Stiglitz, 1994, p. 5). That is, individual ‘A’ (a consumer) is assumed to have access to the same information as individual ‘B’ (the producer) and can wield it the same way as the latter. Here, given the ubiquitous use of the term “individual” in my discussion, I should introduce a signpost to avoid unnecessary confusion between the presumed RCT individual (an abstract concept) and the

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individual as a natural being. The term I will use for the former is ‘ersatz7 human’, which means replacement or substitute (borrowed from Wacquant [Bourdieu and Wacquant, 1992]). Ersatz human has no empirically proven real existence and is merely a pre-given epistemological substitute for empirical human—whether by RCT-based research or the ‘bounded rationality’ variant, regardless of how empirical human interest might be in real practice. My use of ‘ersatz’ is therefore a regular reminder to distinguish between the empirical human (the subject of this research) and the non-­ empirical human (the one I claim underlies EEA). Building on the ersatz human ontology, the theories in social science, including economics, that are underpinned by the epistemology of RCT have the ‘ersatz human’ as their unit of analysis, an epistemology that defines one form of “methodological individualism” (Easley and Blume, 2008, p. 11562). As Kenneth Arrow states with some reservation (1994), “it is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals”. The following statement by North represents what is meant by a pre- given human, from which explanation is said to begin: “the strength of microeconomic theory is that it is constructed based on assumptions about individual human behaviour … institutions are a creation of human beings. They evolve and 7  I considered two alternatives to this term, ‘abstract human’ or the more commonly used ‘homo economicus’, but ‘abstract human’ is too generic considering it can also apply to an abstract habitus-laden human, and ‘homo economicus’ tends to unnecessarily accentuate the ‘economic’ aptitudes of the RCT human, by which an actual empirical human showing motivational variants other than the one ascribed by RCT might be unwittingly divested of this aptitude. This means that the only form of economic human the term homo economicus (literally meaning the economic man) has presupposed and promulgated, by proponents and opponents, is the one who is utility maximizer. This definition has by now become too ubiquitous to permit for redeploying the term with a new meaning in mind. Meanwhile, all humans inevitably have a habitus deposited in them which can contain various motivational compasses for economic activity, including closely approximating the profit-maximizer variant as one possibility (a disposition whose learning and internalization should be traced by the researcher through a study of the contextual milieu of habitus’ production, and be established a posteriori). Hence, a habitus-laden human can turn out to be homo economicus after empirical investigation. The term is therefore misleading as it either divests the nonRCT human of the economic aptitude (rationality) or it disallows the consideration of a habitus-laden human as ‘homo economicus’. Whereas the ersatz human is merely an abstraction, a logical constant that for now contains the substance of what is deemed ‘homo economicus’. Homo economicus has come to obtain a substantive semantic content that can overlap with the motivations of empirical humans, whereas ‘ersatz’ is used as an a priori concept (this will be elaborated in another essay).

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are altered by human beings; hence our theory must begin with the individual” (North, 1990, p.  5). In academic work that relies on RCT or ‘bounded rationality’ as a pre-given unit, the use of ‘individual’ should be seen as an ersatz constant to avoid the misleading confusion of considering such a terminology with an empirical human. Debate concerning human motivation and its use in epistemology began more systematically in the nineteenth century along the ‘historical’ and ‘abstract’ bifurcations in methodology, the former studying individual and social phenomena as units of analyses, the latter studying social phenomenon through the study of human motivations and passions (Lukes, 1968). One formulated theory along the latter lines in the economic method is associated with the Austrian School and its founder Carl Menger (Arrow, 1994). As noted by Frederick Hayek, a thinker associated with this school: There is no other way toward an understanding of social phenomena but through our understanding of individual actions directed toward other people and guided by their expected behaviour. (Hayek, 1948, p. 6)

The domain of collectives, including social categories (e.g. institutions), is also believed to emerge when ersatz humans are coerced or see a personal benefit in cooperative relations (Olson, 1965; Amadea, 2003). This point is consequential for the debate on NIE and its policy implications, discussed below. I should note that so far as the logical implications of this method go, I have followed a similar approach in my empirical investigation. I maintain that the entry point to the understanding of the complexity of social practice lies with the study of the intricate details of the lived experience of the constituent members of a society. Social facts are facts to the extent that they shape and are manifested in individual action. However, how I intend to study a ‘constituent social member’ is fundamentally different from how the above injunction by Hayek assumes her/him as a concept, an ex-ante assumption that has implications in policy and practice that this book is mostly about. I return to this point in Chap. 3 where I formulate the book’s theoretical framework. The admission of the ex-ante ersatz conception has not gone without criticism, and in its defence one rather compelling argument is put forward by Milton Friedman (1953), who suggests that while what is observed on the surface in a social event might contradict the assumptions

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of RCT, the theory’s implications are confirmed at a different level of deductive observation: that its validity is derived from assuming that the event took place based on its assumptions from an ex-post observation (in the same way, he argues, leaves seeking sunlight can be assumed to do so based on a deliberative tendency). Hence, to better understand human motivation and equip social science with the ability to predict human action, it is safe to also ex-ante consider them as self-interested profit maximizers. This is believed to adequately substitute the task of tracing and constructing the ‘empirical human’ rationality. Normatively, Adam Smith’s use of the concept of markets to explain reasons behind the growth of a society’s material wealth posits that when individuals (i.e. the ‘ersatz’ conception) are left on their own to act independently in pursuit of their self-interest, they will not only create harmony by the counteracting effects of everyone seeking their self-interest, but will benefit the society, on aggregate, through an unintended consequence unbeknown to each separate member (Callinicos, 2012)—an idea he develops in his An Inquiry Into the Causes and Nature of the Wealth of Nations, most notably in the following passage: They [the rich] consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own convenience, through the sole end they propose from the labour of all the thousands whom they employ be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means for the multiplication of the species. (Smith, 1977, pp. 593–594)8

8  Interestingly, in the same book Smith refers to the effects of habit, custom and education (Smith, 1977, p. 32) as defining factors in how, firstly, individual professional specialization emerges among individuals of similar ‘nature’ (humans being of the same nature at birth yet choosing to specialize early on in their work life), based on which ‘division of labour’, this fundamental concept in his study of capitalism, takes shape. This contradicts his treatment of human economic incentive as uniformly tending towards self-interest (this motive, rather than any other, defining what the individual chooses to become where his interest lies the most), but also the effacement of the explanatory importance of ‘habit, custom and education’ is much more common in theories that purportedly seek their lineage in Smith’s seminal work.

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This idea of social organization arose in the intellectual environment of Western European Enlightenment that picked up human nature as a serious subject of inquiry where the idea of interest in the economic sense was born through centuries of intellectual work and statesmanship (for an insightful review, see Hirschman, 2013), along the moral dichotomy of Rousseauian and Hobbesian thinking, the former seeing humans as ‘essentially good-natured’, the latter as ‘inherently immoral’ (Callinicos, 2012). The inquiry into the innate propensity in human nature touched on another intellectual problem that was contemporaneous and a corollary to the ‘human nature’ debate—the problem of providing a theory of historical movements through successive periods (Callinicos, 2012, pp. 22–25). Why is it that societies move from one way of life to another throughout history? In answer, Anne Robert Turgot, a French economist, and statesman, recognized “passion and greed” as the motors behind human progress, much in line with the RCT conception of human nature as self-seeking (Callinicos, 2012, p. 25). Directly flowing from this classical debate, RCT as a relatively coherent research tool emerged, and relies on an ahistorical universal category for building explanatory models for studying social phenomena, including markets (see Hayek, 1948). From this perspective on economic management, albeit in an ideal form, allowing pursuance of ersatz human self-­ interest in a market where (s)he competes with other ersatz humans is how prices are set through diffuse and highly intractable individual knowledge (Mises, 2012 [1920]; Hayek, 1945), which reveals scarcity and guides factor allocation to maximize utility (Bowles and Gintis, 1998, p. 8). Instead of a bureaucratic agent deciding how to allocate resources, price signals thus set regulate the economy by facilitating the task of decision-making for resource allocation (Mickiewicz, 2010). Such a “marvel” (Hayek, 1945; Williamson, 2000) comes about if the legal-institutional framework for it is established (Coase, 1959). This theory, seeing “markets” as primal institutions, considers them as having naturally emerged through a spontaneous process (see Chang, 2002, for a critical review), thus representing the natural state of the economy. The implication being that, if it is not present, it might be because some intervening factor is tampering with the natural course of resource allocation. The assumption born out of this is that pushing back these intervening factors by rendering the institutional environment more

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c­ onducive would permit the restoration of the natural order of resource allocation, ideally in such a way that transaction costs are minimized, and productivity improved.

2.2   Enabling Environment Approach Along the lines of previous market-oriented reforms in the 1970s and 1980s (for details, see Starr, 1988; Williamson, 1990; Stiglitz, 1999a; Birdsall and Nellis, 2002; Peet and Hartwick, 2015), the EEA is the most recent policy principle meant to restore the ‘natural order’ of the market-­ based allocative regime, albeit with renewed focus on the state. In this section, I first attempt to substantiate the heretofore implicit claim that the enabling environment approach (EEA) exists as a concept and its principal ideas are derived by the World Bank from seminal work in NIE, among them North’s important 1990 book (see North, 1990). EEA is placed in the historical context of its emergence, its definition derived from IFIs documents, more precisely, the annual World Development Reports between 1990 and 2020 and other World Bank documents. The first time a document refers to an “enabling environment” in the context of private sector development is in a 1990 paper by Peter M.  Fozzard, senior geologist in the World Bank’s African Technical Department. The paper (Fozzard, 1990) identifies the absence of an “enabling environment for high-risk exploration investment” by the private sector as the reason why the region’s mining output is decreasing. Around the same time, the other World Bank document that refers to a market-oriented “enabling climate” is the World Development Report 1991 (World Bank, 1991b). One other text in 1990 where “environment” is used with a similar connotation in mind is North’s influential book on institutions, Institutions, Institutional Change and Economic Performance (North, 1990). North points out that “the evolution of institutions that create a hospitable environment [emphasis mine] for cooperative solutions to complex exchange provides for economic growth” (North, 1990). In a separate essay on institutions a year later, North (1991) asks, “how does an economy achieve … efficient, competitive markets?” He replies that the “central issue of economic history and of economic development is to account for the evolution of political and economic institutions that create an economic environment that induces increasing productivity”. It is important to remember that North’s ideas represented a growing mainstream concern, important enough by then to gain him a Nobel Memorial Prize in Economic Sciences in 1993.

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Prior to these instances, the use of “enabling environment” (or enabling climate) is rarely, if at all, noticed with the same connotation in policy documents by IFIs, other international organizations and in academic journal entries. Even separate uses of both “environment” and “enabling” are not common in World Bank documents. On the contrary, the post-­1990s period has witnessed a proliferation of the concept’s use mainly in the context of market-oriented reforms. The word “environment”, in particular, is increasingly deployed in a state-institutional context where the other, more widespread, connotation referring to the natural environment has also become a mainstream concern owing to the scientific (and perhaps also increasingly popular) consensus regarding climate change. The World Bank World Development Report 1991 promotes the “enabling climate” approach aimed at reconfiguring state institutions in a “market-friendly” (i.e. favourable to market-led allocation) way to make them conducive for private sector investments. The report refers to a “gradually forming consensus” in favour of market-friendly development in the world, a conclusion it draws from state-institutional reconfiguration by various degrees in Chile, China, Ghana, India, Indonesia, South Korea, Mexico, Morocco and Turkey during the 1980s, which it claims has resulted in “improvements in economic performance”. A year before the 1991 World Development report, a fundamental shift in approach to development was announced in the Development Report 1990—with poverty as its thematic focus (Ehtisham et  al., 1990). The new approach replaced the previous model that tended to measure the effect on poverty of particular projects on an “economy-wide” model, particularly by focusing on the impact of government policies on the poor. In a sign that the World Bank had grown conscious9 of the link between state institutions and satisfactory pursuance of a market-oriented model, the World Development Report 1991 states that “markets do not operate in a vacuum”, and for them to emerge and be sustained, laws and regulatory frameworks are needed that only governments can provide. It lays out four areas of ‘reform’: (a) “investing in people”, that is, investments in public education where private sector investment alone is observed by the Bank as inadequate; (b) the government’s role in creating an “enabling 9  At least the paper describing the consensus around policy in Washington, DC, by John Williamson (1990) (i.e. Washington Consensus) does not hint at state institutional reform per se as a primary focus of IFIs’ development policy approach, this concern mostly emerging in the early 1990s.

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climate”, including “competition, adequate infrastructure, and institutions”; (c) integration with the “global economy” through “openness to international flows of goods, services, capital, labour, technology and ideas”; and (d) macroeconomic stability. Two World Bank documents, a 1991 discussion paper Managing Development: The Governance Dimension (World Bank, 1991a) and a 1992 working paper Governance and Development, dealt with the issue of ‘governance’ more systematically, the latter particularly symbolizing the Bank’s aforementioned shift in approach, which is illuminating considering the global context of its emergence, namely, the Soviet Union’s official dismemberment a year before.10 At about the same time, an increasing assertiveness was witnessed by bi-lateral aid agencies for promoting “civil liberties” and “democracy” as conditions for aid to developing countries (Moore, 1993). During the Cold War, for the rival Soviet Union- and US-­ led camps, acting too assertive may have proven problematic, considering it could be seen as an infringement of a ‘third world’ country’s sovereignty, pushing them to choose the rival side. This concern was no longer in place for the one remaining global power—the US-led camp—after the end of the Cold War, which was also where the discourse of governance originated. The Governance and Development document defines governance as “the manner in which power is exercised in the management of a country’s economic and social resources for development”, defining ‘good governance’ as “sound development management”. Absence of ‘good governance’ is acknowledged by the report regarding “efforts to develop privatized production and encourage market-led growth”, which may not “succeed unless investors face clear rules and institutions that reduce uncertainty about future government action”. The following passage summarized the Bank’s new thinking regarding the government’s role in development:

10  This should be situated in the wider global intellectual and policy orientation of that moment which since the 1970s had begun a tilt away from strategies of mixed allocation, that is, allocation regimes that combined bureaucratic allocation of the state with the marketbased allocation (see Chang, 2002). By the 1990s this tilt had led to a full-blown shift towards the latter. This new material allocative regime in the world has been referred to as neoliberalism, which brings together the analytical tools of neoclassical rational choice economics with the politico-philosophical insights from the Austrian-libertarian school.

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The Governments play a key role in the provision of public goods. They establish the rules that make markets work efficiently and, more problematically, they correct for market failure. In order to play this role, they need revenues, and agents to collect revenues and produce the public goods. This in turn requires systems of accountability, adequate and reliable information, and efficiency in resource management and the delivery of public services. (World Bank, 1992)

The paper reaffirms the assertion in the World Development Report 1990 (Ehtisham et  al., 1990) that the Bank’s intervention strategy in developing countries, previously focused on specific project-related agencies of the host government (the government receiving the assistance), was being replaced with a focus on “systemic constraints”, including “sound management” in the state economic agencies that are responsible for policymaking. This “broader approach” was also under way in the areas of public sector “accountability, legal framework for development and information and transparency”. In an important statement, the document states that intervention towards achieving these governance ‘reforms’ is consistent with article 4, section 10 of the Articles of Agreement of the International Bank for Reconstruction and Development (i.e. the development arm of the World Bank Group). The article prohibits the Bank from interference in the political affairs of any member state, and only “economic considerations” are said to form the basis of its decisions. The Governance and Development document, in effect, redefined the target government’s task of “economic management”, encompassing major aspects of a host government’s political control over development policy, as apolitical and technical in nature. And although the Bank ostensibly still restricted itself to the economic dimension of development management, the overlap of the economic and political dimensions of good governance was inevitable, which was resolved by attributing the success of the good governance reform itself to democratic content in the country’s politics (Santiso, 2001). For example, in a sign of the new consensus regarding the systemic approach, the nexus between peace, democracy and good governance was recognized as important for development by the African Union’s 2001 programme, called the New Partnership for Africa’s Development. The concept of “development” itself within the Bank’s re-oriented discourse towards governance has obtained a different semantic significance than when the Bank focused on particular projects in target countries. In

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an analysis of Bank document semantics, Moretti and Pestre (2015) suggest that this transformation in the Bank’s reports (which they call “Bankspeak”) represents an increasing shift to “abstract” and geographically non-specific “nominalizations” (e.g. poverty alleviation, development effectiveness, sustainable development, equitable growth) that do not entail commitments in the form of concrete projects (e.g. hydraulic dams, road network, administrative buildings, schools). The latter language was mostly in use during the 1950s and 1960s when the institution’s role in “reconstruction” (given its name “International Bank for Reconstruction and Development”) was more prominent in setting its policy agenda. The abstracted mode of communication has been increasingly in use during the recent ‘neo- liberal’ phase, also having the important implication, among others, of arbitrariness, that is, it permits a much more involved intervention by Bank experts on the ground considering that the concrete details of the interventions are not pre-determined. The Governance and Development document avoids an overtly persuasive tone and, according to Moore (1993), it appeared to play a “signalling” role to merely inform governments around the world of the Bank’s thinking regarding “good governance”. However, this signalling did come with the proviso that if the reforms proposed by the Bank through its “dialogue” did not bear any fruit, the Bank would reassess the nature and extent of its support for the target country. Thus, the document asseverates that the full extent of support from the Bank could now be expected if the systemic constraints in the host government as a whole were on the table for reform. The document points out the limitations that the Bank’s reforms can face from “national decisions and government commitments” in areas where these are the fundamental determinants. Notwithstanding the importance this limitation has been afforded in other cases ever since, such domestic limitations had a minimal bearing when it came to formulating the governance model towards obtaining a resource-allocative regime in post-2001 Afghanistan—there was no significant pre-existing state authority with the ability to exercise such checks on the World Bank and other international organizations involved, which made the economic policy design particularly radical in its ambition (this is discussed in more detail below). In a subsequent instance, the term “enabling environment” is used in the World Bank World Development Report 1992 in the context of the host government’s willingness to align their development management with what the Bank calls “efficient and equitable service” provision, not

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necessarily on its own but, at least in the short run, through the involvement of the private sector and NGOs (the “informal sector” as per Guha-­ Khasnobis et al., 2007). Instituting an “appropriate legal, regulatory and administrative framework” is identified as the substance of this reform to lay the basis for, inter alia, private sector participation in the economy. The word “participation” here is informative, given that the role of public sector economic resource allocation still remained relevant enough not to write it off entirely, that is, the purpose underlying EEA by then was the establishment of conditions for participation of the private sector parallel to the public sector, rather than the state taking a back seat in an economy characterized by private sector-led resource allocation. In the World Development Reports 1993 (Berkley et  al., 1993) and 1994 (John et al., 1994) “enabling environment” is used in the context of investing in the health sector to better enable households and for “successful reform and development of infrastructure” given the thematic foci of the documents in those years—investing in health and infrastructure respectively.11 In the World Development Report 1996, focusing on transition from a planned economy to market economy, the language in support of market-oriented reforms is empty of the previous cautionary tone, and the “freeing of the market” is said to be the “enabling reform from which all the benefits of transition flow”. The “enabling” institutional models to emulate mentioned in the document are the Bundestag in Germany and corporate laws in the United Kingdom and the United States (Nicholas et al., 1996). In the World Development Report 1997 (Chhibber et al., 1997), which draws heavily from NIE and notably North’s influential 1990 book, with the role of the state as its thematic focus, the Bank lays out the governance initiatives to foster “liberalization and privatization” in three areas: preparing for reform, establishing an enabling business environment, and privatizing (or liquidating) state enterprises. In regard to the “enabling business environment”, the report mentions reform that “supports competitive private markets” based on “rules of the game that facilitate entry and competition, and a complementary institutional, legal and regulatory 11  The World Bank Development Reports have ever since used the term in other areas (e.g. enabling environment for information and communication technology, education, health), showing that the scope of its usage by the Bank has grown beyond strictly focusing on state laws and regulatory frameworks to other domains, while the substance of it has remained consistent with a market-oriented direction in development policy.

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framework that undergird property rights and markets, including (notably) financial markets”. As discussed above, this line of thinking had become well-developed by that point (see above section on NIE). The formulation “rules of the game” is, in fact, taken directly from North (1990). NIE in general saw an upsurge in popularity in the 1990s (Rajagopal, 2008). Tellingly, the International Society for New Institutional Economics (renamed Society for Institutional and Organizational Economics) was established in 1997. The World Development Report 1997 defines the concepts of “enabling environment” and “supportive environment” with far better coherence compared to previous reports, basing its understanding on two documents: the World Bank Handbook on Good Practices for Laws Relating to Non-governmental Organizations and the World Bank Social Assistance and Poverty-Targeted Programs: A Sourcebook Prepared by the Social Assistance Team, both published in 1996 (Chhibber et al., 1997). In the subsequent World Development Reports until the most recent one in 2020, the term “enabling environment” (with “business environment”, “climate”, “framework”, “institutions” or “markets” sometimes replacing environment) is increasingly used in terms suggesting economic management by the government in ways that are conducive to a private sector-led allocative regime. The term had become common enough that by 2005 the World Development Report in this year was called A Better Investment Climate for Everyone. Around late 1990s and early 2000s, a big push for “governance reform” begun by the World Bank around the world which saw 600 instances of such interventions in 95 countries between 1996 and 2001 (Development Committee of the World Bank as quoted in Santiso, 2001), which represented a somewhat modified ‘Washington Consensus’ (Rodrik, 2001), was advanced by the World Bank due mainly to the social impacts of the 1980s policy package (e.g. in post-Soviet Eastern Europe). This ‘institutionalist’ view  was integrated into the World Bank Comprehensive Development Framework (World Bank, 2003), and included such areas as a “sound financial system, an adequate regulatory and competitive framework” but also “policies to facilitate the transfer of technology, and transparency” (Del Castillo, 2008, p. 275). The importance of state institutional capability to facilitate market exchange was partly stressed by some thinkers who were not within the mainstream development thinking (see Chang and Nolan, 1995) or had fallen out with it (see Stiglitz, 1999b). In 1999 the World Bank and IMF

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established a mechanism to provide developing countries debt relief and concessional loans provided that they tailor their development strategy to Poverty Reduction Strategy Papers, or PRSPs, whose final approval rested with members of the boards of both the Bank and the Fund. By 2006 nearly all low-income and highly indebted countries had produced PRSPs, totalling 77 (Stewart and Wang, 2003). By the mid-2010s the ‘market systems’ thinking was well integrated into the United Nations developmental approach, as evidenced in the ‘Sustainable Development Goals’. Market systems are defined as a “multi-function, multi-player arrangement that includes a dynamic combination of people, relationships, functions and rules that determine how a particular good or service is produced, accessed and exchanged” (Hunter and Moores, 2018). The 1990s “institutional” shift towards state–market complementarity in World Bank reports coincided with what Rajagopal (2008) refers to as a turn to “rule of law” as a solution to intra-state conflicts following the end of the Cold War and the need for rescuing “failed states”, as a “technical, legal and apolitical” policy instrument that could offer solutions to problems in disparate areas of post-conflict reconstruction, including the preservation of security and economic development. To summarize, around the time of the intervention in Afghanistan in late 2001, the new development consensus involved state institutional reforms to create an enabling environment for a market-led allocative regime (i.e. a non-intervention framework), entailing “good governance” and “rule of law”. Based on the usage of “enabling environment” by the World Bank, the concept can be defined as a principle for institutional reconfiguration to facilitate exchange based on the effort to create ‘efficient markets’ (a la North). The “enabling” part—being the opposite of “disabling”—implies the extant ability to act, that is, it rests on a presupposition of some innate energy that awaits enabling. Herein lies the ontological assumption of EEA that a priori views individual allocative interest as ‘wealth maximization’. Without presupposing an ersatz human conception, the ‘enabling’ effort would be empty of content, finding its meaning if intended to operate as a facilitator of ersatz human action in the form of an individual’s wealth maximizing effort (i.e. investment). And all members of society thus performing as ‘wealth maximizers’, the enabling of the sum total of the innate energy they represent would, it follows, unleash an untapped social potential, leading to the aggregate self-regulating momentum for material growth. Merely enabling this potential through “good

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governance” should, therefore, bring about material growth and with that, economic development. Having oriented the political power of the state towards “enabling” the environment as a principle for economic management, the task of resource allocation must rely thereafter on the innate ability of ersatz humans for its realization. The state bureaucracy, meanwhile, is not to directly enter the realm populated by ersatz humans, where coordination of resource allocation is presumably undertaken by the forces of the ‘market’. Perhaps distinguishing the word “enabling” from the other commonly used term in development discourse, “empower”, might better help grasp its semantic content. The latter (e.g. empowering women, empowering the poor, empowering poor nations) may imply burden-sharing in the process of granting the power to act (e.g. empowering an investor may require granting her/him concessional credit). In contrast, there are no indications in how “enable” is defined that would entail a similar commitment. Enabling would inevitably rely on a source of activation, in its innate and tangible forms. The term also entails a practical implication, that is, what is enabled is expected in tangible social action; it refers to an outer manifestation of the presupposed innate propensity in the particular form of utilizing non-barren, tangible (primarily financial and technological equipment but also land) and intangible (technical know-how) assets in a capitalist investment.12 Meanwhile, ‘environment’ in EEA refers in particular to the (in)formal institutional milieu where the act of investment takes place, that is, institutional constraints. The more the range of productive activity is expanded through conducive laws and regulatory framework, conditions for private investment become ipso facto relatively more favourable. To go back to Williamson’s notion of markets as primal institutions (Williamson, 1973; see Chang, 2002, for a critique), government by this mere act would clear the space for the ‘natural order of things’ to step back in, thus increasing the likelihood of ersatz individual capitalist investment. The institutional constraints that might be impeding this are believed to lie both within and outside the state agencies, from which the process of ‘reform’ is said to begin to first root out the internal dimension of the “weaknesses” (World Bank, 1992), subsequently reforming the society at large to create the conditions that are conducive for capitalist investment. 12  For a review of the theories of “capital” from an institutionalist perspective see Ranson (1987).

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The tendency to ‘create’ in addition to the commonly known objective of ‘reform’ requires particular attention when it comes to EEA’s distinctiveness. Even though it is a market-oriented paradigm13 of which there have been many variants, including structural adjustment programmes (Rodrik, 1990), (post-)Washington Consensus (Williamson, 1990; Stiglitz, 1999a), the competitive paradigm or neoclassical economics (Stiglitz, 1994; Fukuyama, 1995), neo-liberalism (Harvey, 2005), and deep marketization (Caroll, 2012; Neusiedl, 2017), EEA in Afghanistan nonetheless merits the particular designation adopted here. This is because it refers to a form of market-oriented approach by which there was a holistic effort at creating, rather than the proverbial ‘unleashing’ of the forces of the market that is often seen as attainable through the simpler task of reform. In sum, the ‘Washington Consensus’ market-oriented policy was mainly reformist. EEA, along the same lines, bears by all accounts a radical tendency as the ambition to reform the target society at large.14 EEA’s relatively radical approach can be included in the recent turn towards what Toby Caroll (2012) calls “deep marketization”, the idea that society in its entirety now forms the target of market-oriented reform (see Phelps, 2008, for an example of this line of thinking). In contrast to the 1980s reforms, however, the EEA objective is seen as attainable through the state machinery. While under the ‘Washington Consensus’ there appeared to be an insistence by IFIs to reduce the state’s scope in general, now under new institutionalist EEA the state is being brought back with the purpose of enabling the institutional environment, an effort that has nonetheless remained committed to “state minimalism” in productive resource allocation. In a contradiction that comes to bear on economic development, the focal point of policy for building state machinery has been the pursuance of a “state minimalist” approach (Caroll, 2012) through the state machinery itself—an idea concerning the state which is theorized in NIE that, as stated by Menard and Shirley (2005), seeks to balance the state capacity to effectively protect and enforce private

13  Paradigm understood as a “framework of concepts, results and procedures” that gives direction to thinking and research (see Kuhn, 1960). 14  Which can be witnessed, for instance, in conducting education programmes that promoted ‘entrepreneurship’ among youth (see, e.g., Cusak and Malmstrom, 2010; United States Agency for International Development, 2019; Organisation for Economic Co-operation and Development, 2019).

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property while ensuring that it does not become too powerful to also attempt to expropriate it.15 In the context of Afghanistan, this translated into technical and financial assistance to create state institutions that supported private sector-led resource allocation. The economic design thus remained overwhelmingly focused on government institutions in a strategy that—not being able to ignore the issue of instituting a government bureaucracy following the ouster of the first Taliban regime yet not permitted by the economic agencies of this government to directly intervene in productive resource allocation—led to what I call (for lack of a better term) ‘roundabout statism’, with a particular type of state administration in mind: the one that adhered to “good governance”. The following diagram, starting from the topmost box and moving clockwise (the arrows indicating positive effect), at the risk of parsimony, summarizes EEA’s practice in post-2001 Afghanistan (Fig. 2.1). This policy design, as can be noted, aimed to resolve the effect of a phenomenon through the effect itself. If non-viability (ineffectiveness, inability, inadequacy and shortage of enforcement capacity) of state institutions could be attributed to the presence of conflict, the above design was intended to resolve the economic reasons for conflict through the same state that remained non-viable due to unceasing conflict. The state being non-viable as a consequence of constant insecurity, among other reasons—a condition that could be attributed to the aftermath of a long period of war—was tasked to generate EEA. It was expected that it would lead over time to the spontaneous mechanism of markets (the “marvel”, as per Williamson) that would work on the basis of ersatz human selfinterested wealth maximization16 and the cues provided by ‘prices’ to allocate resources and generate taxes to, among others, finance the same state  This concern was legally enshrined in the 2004 Afghan Constitution:

15

Property shall be safe from violation. No one shall be forbidden from owning property and acquiring it, unless limited by the provisions of law. No one’s property shall be confiscated without the order of the law and decision of an authoritative court. Acquisition of private property shall be legally permitted only for the sake of public interests, and in exchange for prior and just compensation. Search and disclosure of private property shall be carried out in accordance with provisions of the law. (Afghanistan Ministry of Justice, 2004)

 The book is aimed at re-examining this foundational assumption.

16

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Fig. 2.1  EEA in practice

(in theory; in practice the finances would be overwhelmingly dependent on foreign aid), also leading to employment and tax generation, material growth and, hence, economic development. With considerable luck, the latter would reduce poverty and inequality and through a long journey (nearly two decades in Afghanistan), the country in question would come back to resolving, albeit in its economic dimension, the underlying reasons for the conflict, which, as a formidable and unavoidable element, have been present in the context and working the opposite way.

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Schuurman, J. F. (2003). Social capital: The politico-emancipatory potential of a disputed concept. Third World Quarterly, 24(6), 991–1010. Sen, A. (2000). Development as freedom. Alfred A. Knopf, Inc. Shirley, M.  M. (2005). Institutions and development. In C.  Menard and M.  M. Shirley (Eds.), The handbook of new institutional economics (pp. 611–639). Springer. Simon, H. (1955). A behavioural model of rational choice. The Quarterly Journal of Economics, 69(1), 99–188. Smith, A. (1977). The wealth of nations. University of Chicago Press. Starr, P. (1988). The meaning of privatization. Yale Law and Policy Review, 6, 6–41. Stewart, F., and Wang, M. (2003). Do PRSPs empower poor countries and disempower the World Bank or is the other way round?. Working Paper Number 108, QEH working paper series. Retrieved August 1, 2017, from file:///C:/Users/ kam_r/Downloads/papers5CDo20PRSOs20Empower20Poor20 Counties.pdf. Stiglitz, J. (1994). Wither socialism. MIT Press. Stiglitz, J. (1999a). Whither reform? Ten years of the transition. Paper, Annual Bank Conference on Development Economics. Stiglitz, J. (1999b). More instruments and broader goals: Moving toward the post- Washington consensus. Wider Perspectives on Global Development, 16–48. United States Agency for International Development. (2019). USAID helps Afghan female entrepreneurs entering the market. Retrieved November 9, 2019, from https://www.usaid.gov/afghanistan/news-­information/press-­releases/ Apr-­25-­2019-­USAID-­Helps-­Afghan-­Female-­Entrepreneurs Williamson, J. (1990). What Washington means by policy reform. In J. Williamson (Ed.), Latin American adjustment: How much has happened. Peterson Institute for International Economics. Williamson, O. (1973). Markets and hierarchies; some elementary considerations. The American Economic Review, 63(2), 316–325. Williamson, O. (1993). Calculatedness, trust, and economic organization. Journal of Law and Economics, 36(1), 453–486. Williamson, O. (2000). The new institutional economics: Taking stock, looking ahead. Journal of Economic Literature, 38, 595–613. Williamson, O. (2005). Transaction cost economics. In C.  Menard and M. M. Shirley (Eds.), The handbook of new institutional economics (pp. 41–69). Springer. World Bank. (1991a). Managing development: the governance dimension. Discussion Paper, The World Bank. World Bank. (1991b). World development report 1991: The challenge of development. World Bank Group. Retrieved April 2, 2019, from http://documents. w o r l d b a n k . o r g / c u r a t e d / e n / 8 8 8 8 9 1 4 6 8 3 2 2 7 3 0 0 0 0 / Wo r l d -­ development-­report-­1991-­the-­challenge-­of-­development

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World Bank. (1992). Governance and development (English). World Bank Group. Retrieved May 3, 2019, from http://documents.worldbank.org/curated/ en/604951468739447676/Governance-­and-­development World Bank. (2001). World development report 2000/2001: Attacking poverty. World development report. Oxford University Press. World Bank. (2003). The comprehensive development framework: A multipartner review. World Bank Operations Evaluation Department. Retrieved May 4, 2019, from http://documents.worldbank.org/curated/en/936041468 779995923/pdf/37OED0ReachJu ne3rd.pdf

CHAPTER 3

Theoretical Framework; Embodied Institutions

To better frame this discussion, I introduce the following institutional categories at the outset. I believe distinguishing among these categories is necessary to ameliorate the conceptual apparatus applied in a study of this kind. 1. Explicit Formal: Laws and regulations formulated and enforced by state coercive apparatuses and organizations operating within the domain of state-recognized legality. The explicit formal institutional category consists of the codified forms of rules that are commonly referred to (in NIE and OIE literature) as ‘formal institutions’. 2. Explicit Socio-Structural: Laws, conventions and traditions formulated and enforced by non-state apparatuses (those outside the state’s legitimate jurisdiction and competence). Explicit socio-structural institutions are instituted contemporaneously or have come down through tradition. 3. Implicit Formal: Norms that are often linked to and grow in the form of extensions of the first category over time. Implicit formal institutions contain the unwritten tacit codes that emerge during the enactment of category 1 (formal explicit) rules. 4. Embodied or Implicit Socio-Structural: Norms that are transmitted in an embodied way through social structures (e.g. trust, reciprocity, altruism, honesty). Implicit socio-structural institutions have a less certain

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source of origination compared to category 3. However, their ­perpetuation is tied to and renewed by existing social structures and persist in an embodied sense. This the category that has been referred to in the thesis as embodied institutions. A positive investigation (in contrast to an instrumental one in relation to either transaction costs or collective non-state governance) would require a movement from the ground up by prioritizing the study of the effects of the latter three categories as ordering mechanisms, entailing some effort to construct elements of an empirical human habitus. The distinction between the above categories is consequential for the conceptualization of institutions, and how institutionalized practices are empirically brought under investigation. The above institutional categories are distinguishable by, inter alia, five criteria: (1) immediate1 origin, (2) mediums of transmission, (3) enforcement and monitoring mechanism, (4) definability, (5) and prescribed retribution in case of violation. It should be noted that the elements that can be included in the last two institutional categories, particularly the latter one, are not only uncodified but in fact retain their efficacity by their very capacity to remain diffuse, uncodified and unwritten. Upon becoming codified, they might be included in the first or second category depending on the ‘immediate origin’. In conceptualizing institutions, there might be a need for an important distinction, I believe, between common-sense awareness of a social phenomenon (denial of which would be absurd) and an epistemological application of it in a scientific study (work meant for the purpose of exposition and explanation). To illustrate, all humans in a normal state of mind are aware of the ‘human individual’ (denying this fact would be absurd, considering that we are all human individuals). However, for a social scientific investigation, how the epistemological application of the human individual is developed, and subsequently used in the explanation of a social event, is substantively different than the nominal one afforded by the common-sense awareness. The former can, in many ways fundamentally, alter the tasks of designing research, decisions for empirical data gathering and devising a 1  The word immediate refers to the chronologically most recent enactment as an origin, not the preceding stages of the development of such institutions. For instance, the rules governing sartorial propriety in a theocratic state are formulated by the legislative body and enforced by law enforcement agencies (e.g. morality police), even though the preceding development of such rules is to be found in religious jurisprudence.

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strategy for their analysis. For instance, the concepts of the individual discovered through inductive empirical investigation and the individual as a substantive pre-given unit (the “calculative approach” as per Williamson, 1993) are two different things (the latter in all its forms is referred to as the ‘ersatz human’ in this book, the former used as the point of departure). Seeing humans as boundedly rational does not preclude also seeing them as ‘ersatz humans’ in line with RCT. This assumption has the same effect as non-empirical a priori assumptions tend to have on research. The tendency in NIE to view all institutional categories as ‘constraints’ arises not out of discounting these institutions as objectively irrelevant, but out of method. Ostrom (1998), for instance, suggests that trust, reciprocity and reputation, and face-to-face communication are important elements in examining individual behaviour, particularly in social dilemmas, and they should be added to the complete rationality of the RCT human, in a conception that is based on ‘bounded rationality’. She does refer to ‘socialization’ as a source of learning these norms or the rules governing these traits, yet does not provide a clear empirical entry point for studying them: it is simply argued that these are to be added a priori to the RCT-derived assumptions as integral components of a pre-given human rationality, relevant to the degree that the circumstantial requirements make the RCT version of rationality too parsimonious. This is only a slight improvement to the RCT version so far as the issues that pre-given units of analyses can bring about in empirical research. The contention also applies to North’s idea of ‘choice’ by which an attempt is made to subsume institutions into an RCT framework, albeit in a way that posits the ersatz human as ‘boundedly’ rational to account for the institutional “constraining” effect on her/his action (see North, 1990; Williamson, 1993; Crawford and Ostrom, 1995; Ostrom, 1998, 2007). The methodological confusion in how North deploys the term ‘choice’ regarding how institutions are set up and then evolve appears nowhere sufficiently resolved by him. However, considering the affinity he seeks to establish between his variant of institutionalism and neo-classical choice-­ theoretic methodology, the confusion is implicitly resolved by putting the weight of his epistemological concept of choice (the one that matters in research) on the neo-classical understanding of it. How neo-classical theory applies choice cannot be understood except for seeing it as consequent to the human subject (I am first; I make choices after). If we consider all human social activity as products of this form of choice in scientific research

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(lets ignore, for an instant, the tokenistic admission of other messy areas that, though admitted, are not factored into the explanation), then institutions too are subjected to the same model in actual research—as a product of human choice that constrains her/his politico-economic incentives (North, 1990), meant to reduce uncertainty in the “human landscape” (North, 2005) and to allow actors to convert uncertainty (a situation where outcomes cannot be factored into the decision-making process) to risk (where different outcomes can be factored in) (see North, 1991). The confusion in NIE (particularly in North and Ostrom) arises out of confounding the latter three institutional categories in Table  3.1 under the generic concept of ‘informal institutions’ (see North, 1990)—which might be due to the partial exposition of elements of the latter three categories owing to their relative importance in relation to a topic of interest (market-based transaction costs in NIE). It does not matter if they are recognized nominally. What matters is their application and place in theory. The conceptual confusion is seen to lead to an eclectic integration of some of the elements of the three categories for constructing a pre-given unit of analysis beyond RCT (see Ostrom, 1998), or these categories are observed as mostly irrelevant to an institutionalist analysis that focuses on contracts (see Williamson, 2000). In other systematic analyses, these categories are seen as an instrument to transcend the unitary grip of Westphalian nation-state on governance (Guha-Khasnobis et  al., 2007; Hart, 2006; Christensen, 2006). They are in most usages and rather uniformly treated as ‘informal constraints’ (see North, 1990).2 Furthermore, aside from issues having to do with conceptual confusion (something I have sought to partly resolve in the book by adopting the above four institutional categories), an important effect in method regarding institutions can arise owing to the point of departure. The quote by North at the beginning of Chap. 2 locates the point of departure in NIE tradition in ‘cost of transaction in a market exchange’ (TC), which according to him is the main factor that makes institutional analysis (IA) relevant. That is, if TC, then IA. The latter’s place in research is evidently dependent on the perceptibly prohibitive effects of the former. The purpose of such an investigation is 2  Tellingly, a volume on formality and informality (Ghua-Khasnobis et al., 2007) appears to treat the latter’s explanatory importance in relation to its effect, that is, an ‘informal sector’, ‘informal’ referring to a mode of governance by rules that lie outside the reach of government law.

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Table 3.1  Institutional categories Immediate origin

Mediums of transmission

1. Explicit formal

State Codified, visible legislative and legible activity and text/form organizational hierarchy

2. Explicit socio-­ structural

Social structures (family and non-family social groupingb)

Mostly verbal communication but also written transmission in some cases (e.g. customary property deeds)

3. Implicit formal

Extension of first category

Practical experience (embodied transmission)

4. Implicit socio-­ structural

Habitus as structured by social structures

Practical experience (embodied transmission)

Enforcement definability Prescribed and monitoring retribution in mechanism case of violation Formal political apparatus (e.g. state law enforcement apparatuses, bureaucratic hierarchy in an organization)

Intentional Penalty applies in all cases (its enforcement depending on elements often not fully stipulated in law) Social Intentional Penalty structures applies in all (family and cases but non-family rigorous to social grouping the extent hierarchy) arbitrary capacity of enforcement mechanisms in these cases permit Mutual Non-­ Mostly understanding intentional reputational of the parties and without involved any somatic penalty Habitus as a Non-­ Mostly structuring intentional reputational structure and without any somatic penalty

a The rule lends itself to a relatively comprehensive understanding of the necessary and sufficient conditions to which it refers, for example a ‘red traffic light’ refers to a sign that is represented by a red light, upon the viewing of which incoming cars are required to stop

This can include any grouping other than the family but also not active within the explicit formal domain. Examples of this can include village-level consultative bodies, a tribal unit at the village level, a neighbourhood/community association, and other such collectives, that can lay out rules for members (rules gov-

b

(continued)

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Table 3.1 (continued) erning murder of a member by an in-group or out-group individual, theft of her/his property, adultery, etc.) c The norm lends itself to relatively apprehensive understanding of the necessary and sufficient conditions to which it refers. The amorphous and tacit awareness it evokes is experienced in practical form

the discovery of efficient and non-efficient institutions. The word efficient is used by North “to indicate a condition where the existing set of [institutional] constraints will produce economic growth” (North, 1990, p. 92). Therefore, IA, in NIE tradition, considers the relevance of those institutions that have a bearing on the level of TC, deriving their importance in the investigation insofar as they increase or decrease TC. If TC does not exist (market is frictionless and the instantaneity of neo-classical theory holds), IA’s place in theory and research becomes redundant. Likewise, if a society is governed entirely by formal institutions (in a hypothetical sense), the IA most relevant to the study of TC would include only these forms of institutions. If we move to a society where a slight admixture with informal institutions is viewed as affecting TC, relevant to the degree of TC with the predominantly formal ones, then they too become relevant in research (and the policy that comes out of it). As such, the extended concept ‘institution’ is studied in part—that part which has a bearing on economic growth (for an example of this NIE application, see Sen and Steer, 2010). Meanwhile, what happens in actual research is the treatment of the above four institutional categories as uniform, as ‘humanly devised constraints’. This puts a formative effect on research. That is, imagining institutions as constraints perforce leads to the adoption of some other element in the research that these phenomena are believed to constrain—a pre-­ given unit of analysis that would inevitably have to be factored in separately, distinct from these constraints. Due to the movement from TC to the study of institutions in part, the researcher complements the investigation by imagining these as constraints to some ‘in-and-of-itself’ substantive rationality (either the absolute form of the RCT or the boundedly rational variant of Herbert Simon adopted in NIE). North constantly reminds us of informal constraints’ persistence, dedicates a chapter to them in his influential book Institutions, Institutional Change and Economic Performance (North, 1990), and writes at length about the difficulty in understanding them fully and how they are much more pervasive than formal rules: “formal rules, in even the most

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developed economy, make up a small (although very important) part of the sum of constraints that shape choices; a moment’s reflection should suggest to us the pervasiveness of informal constraints” (North, 1990, pp. 36–46). However, when it comes to the conceptual institution (as a variable in his system of thought), informal institutions come into existence to the extent that they imbricate the investigation of transaction costs and productivity, the researcher working her/his way from the point of departure (TC) towards it. As such, some (in)formal institutions become relevant to such an inquiry, depending on the context. And considering that formal rules might be more present in determining transaction costs and productivity in the modern capitalist economies North discusses (mainly the United States, the United Kingdom, Spain and Latin America), the discussion shifts overwhelmingly to these aspects of institutions. Indeed, at points, informal institutions (as a category encompassing categories 2, 3 and 4) get subsumed under formal ones: “underlying these informal constraints are formal rules” (North, 1990, p. 36). This treatment of formal and informal institutions is also witnessed in the discussion on ‘incremental changes’ in institutions, where North suggests that the “evolution of the common law” (a formal institution) can be considered as a way to understand overall institutional change (North, 1990, p. 96), formal and informal. The set of informal institutions seem to respond to changes in the formal rules and act as extensions and elaborations of them: “arising to coordinate repeated human interaction, they [informal rules] are (1) extensions, elaborations, and modifications of formal rules, (2) socially sanctioned norms of behaviour, and (3) internally enforced standards of conduct” (North, 1990, p. 39). Meanwhile, taking these three categories as forms of “informal constraints”, only the last one, as per North, does not abide by the “wealth-maximizing model” and is often observed when the “individual gives up wealth or income for some other value in his or her utility function”. Even in this case, their effectiveness on individual social behaviour is tied to the logic of cost: “…the lower the price of ideas, ideologies, and convictions, the more they matter and affect choices” (North, 1990, p. 40). North adopts price analysis in the expression of convictions, explaining their effect relative to the cost the wealth-maximizing agent might incur in doing so: “it is simply impossible to make sense of history (or contemporary economies) without recognizing the central role that subjective preferences play in the context of formal institutional constraints that enable us to express our convictions at zero or very little cost” (North, 1990, p. 44).

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Regarding a “very large residual” of ‘informal’ institutions in the latter category that modify individual behaviour, North claims that a convincing theory to explain their effect does not exist: “we simply do not have any convincing theory of the sociology of knowledge that accounts for the effectiveness (or ineffectiveness) of organized ideologies or accounts for choices made when the payoffs to honesty, integrity, working hard or voting are negative”. A bold statement, to say the least, as it downplays a great deal of social scientific work on the effects of ideology. As a solution to this quandary, he falls back on the “wealth-maximizing” hypothesis: “even if we do not possess a good explanation for social norms, we can model wealth-maximizing norms in a game theoretic context”. And he further extends the logic of rules on informal norms: “although the informal institutional constraints are not directly observable, the contracts that are written, and sometimes the actual costs of transacting, provide us with indirect evidence of changes in informal constraints” (North, 1990, pp. 42–43).3 Though it is admitted that human motivation is “more complicated than the simple expected utility model”, important traits such as “honesty, integrity, and living up to a reputation” too are observed as having returns in “strictly wealth-maximizing terms”. This point is summarized in the following paragraph: What determines how much people will pay to express and act on their convictions? We seldom know much about the elasticity of the function or shifts in the function, but we do have abundant evidence that the function is negatively sloped and that the price incurred for acting on one’s convictions is frequently very low (and hence convictions are significant) in many institutional settings. (North, 1990, p. 44)4

The claim that institutional structures “allows people to express their view at little cost to themselves” and that anti-slavery movements were possible in the nineteenth-century United States because “individuals 3  Owing to the conceptual confusion, he states elsewhere in the same book that: “equally important is the fact that the informal constraints that are culturally derived will not change immediately in reaction to changes in the formal rules” (North, 1990, p. 44). 4  By this logic, if a Muslim refuses an interest-based loan (a common behavioural trait, including among the study participants), it is to be accounted primarily as an outcome of a negatively sloped cost curve, and not because it is strictly forbidden in Islam—a conclusion that would be evidently wrong, as doing so directly affects the costs (in a very material sense) of doing business, and yet a believer is not deterred from ‘expressing’ her/his belief by word and deed due to this concern.

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could express their abhorrence of slavery at relatively little cost to themselves” (North, 1990, p. 85) might contradict the history of ideas, barring perhaps exceptions where expressing ideas contrary to the prevalent institutions did not entail outright violence. The ‘price’ one might pay proportionate to the expression of one’s ideas should be high, by this postulate, particularly in the case of extremists, who are never deterred by such concerns (to the extent, sometimes, of committing suicide in the service of their conviction). It should be emphasized that the theoretical shorthand most recurrently seen to confound the distinctive characteristics of category 4 institutions, in particular, is by reducing all ‘informal institutions’ as aspects of rules that are not recognized by state codified law, which is what North (and Guha-Khasnobis et al., 2007) in the quotes above suggests can be done to overcome the lacunae he thinks exist in regard to informal norms. By that logic, it is only a short leap in the investigation of these institutions to also locate them under the general category of rule-based ‘constraints’: “the growth of more complex forms of exchange in later medieval and early modern Europe was made possible by a variety of informal institutions such as the early law merchant’s [emphasis mine] publicized of merchant conduct” (North, 1990, p. 41). This blurring of the distinction between ‘formal’ and ‘informal’ institutions, as they are both treated as rules that entail some form of socially administered sanction, becomes more pronounced in other places, the latter getting subsumed in the former: “the difference between informal and formal constraints is one of degree. Envision a continuum from taboos, customs, and traditions at one end to written constitutions at the other…the increasing complexity of societies would naturally raise the rate of return to the formalization of constraints” (North, 1990, p. 46). There is as a result much confusion between formal and informal institutions, their role in shaping exchange, and their respective capacities to endure external factors. In the discussion on “informal norms” (North, 1990, pp. 36–46), all those social ordering mechanisms that are not recognized by the state law and legal framework are seemingly included, including explicit codes of behaviour. This is seen, for instance, in the discussion regarding the Nuer and Tonga tribal communities (North, 1990, pp. 37–38) or in the discussion on the Shasta County, California, who do not resort to “legal redress” (i.e. formal framework of law by the state) but resolve disputes through “informal” means (i.e.

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Explicit Formal Institutions

F

F

C F

Category 2, 3 and 4 Institutions

Non-empirical Universal Interest

C

A F

F

Unit of Transaction

Category 2, 3 and 4 Institutions

C

B F

Fig. 3.1  NIE institutional schema as per Williamson (2000). (Legends: ‘A’ and ‘B’ represent individuals in an exchange, the box between A and B displaying NIE’s epistemology; ‘C’ symbolizes a constraining relationship and ‘F’ symbolizes feedback (one-way or mutual). Solid line arrows represent direct short-term relationship; dotted line arrows represent (in)direct long-term relationship. The stripped area constitutes NIE’s ‘level of analysis’)

non-governmental rules) (North, 1990, p.  39).5 The NIE institutional scheme (see Fig. 3.1 in Chap. 3) should be read in light of the above discussion only, otherwise without context it might be read as suggesting that NIE research is unaware of informal institutions or disregards them. Regarding formal rules, the following paragraph sums up the point of departure (facilitation of exchange by reducing transaction costs) and the ontological assumption (wealth-maximizing behaviour) North adopts: Given the initial bargaining strength of the decision-making parties, the function of rules is to facilitate exchange, political or economic. The existing structure of rights (and the character of their enforcement) defines the existing wealth-maximizing opportunities of the players, which can be realized by forming either economic or political exchanges. (North, 1990, p. 47)

This idea is important to comprehend the logic behind the kind of enabling environment the World Bank seeks to establish in policy form, derived primarily from the notion of formal institutions propounded by North: “at issue is not only the incremental character of institutional change, but also the problem of devising [emphasis mine] institutions that 5  These explicit forms, nonetheless, should be recognized as “formal” explicit rules, even if not recognized by a state, in order to adequately distinguish them from implicit norms, to then investigate how they come about and are transmitted (the embodied/implicit transmission and the objectively definable explicit form).

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can provide credible commitment so that more efficient bargains can be struck” (North, 1990, p. 52). The general thrust of the institutional ‘scaffolding’ gradually emerges in North’s ideas where “low-cost contract enforcement” (as a product of formal institutions) is said to be the most important source of economic stagnation and underdevelopment in the developing world (North, 1990, p. 54). The key is to establish the kind of condition that is conducive to evolutionary or ‘incremental change’ within the institutional framework, rather than a situation that leads to a crisis (revolution) due to contractual disputes unresolvable within that framework. “Political institutions (both formal and informal) can provide a hospitable framework for evolutionary change. If such an institutional framework has not evolved, the parties to an exchange may not have a framework to settle disputes, the potential gains from exchange cannot be realized, and entrepreneurs…may attempt to form a coalition of groups to break out of the deadlock by strikes, violence, and other means” (North, 1990, p. 89). While a change in formal rules might be attempted, North argues, the deep-seated informal constraints as an “extension of previous formal rules” are difficult to synchronize with the new rules, resulting in a condition that gradually leads to a “new equilibrium that is far less revolutionary” (North, 1990, p. 91). Despite this admission, he goes on to state the following for making the ‘political market’ approximate the zero-­ transaction cost model for efficient economic exchange: Legislation would be enacted which increased [increase] aggregate income and in which the gainers compensated [compensate] losers at a transaction cost that is low enough to make it jointly worthwhile. (North, 1990, p. 108)

Regarding the problem of the divergence of economic performance and the persistence of ‘poor performance’ over long periods, North’s methodological plain shifts to the historical long durée: “if we look back far enough in history, divergence appears to be very simple to explain” (North, 1990, p. 92). The animistic automaticity underpinning the concept of equilibrium in neo-classical theory can be extended, North believes (1990, p. 112), to the level of long-run institutional change while keeping in mind that ‘evolutionary change’ from less efficient to more efficient institutional frameworks is not costless, which is the reason that the differential performance among societies persists: “if institutions existed in the zero transaction cost framework, then history would not matter; a change in relative prices or preferences would induce an immediate

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restructuring of institutions to adjust efficiently” (North, 1990, p.  93). This point is woven into the centrality of ‘contract enforcement’, evident in North’s description of the ‘success story’ of Western European institutional development (North, 1990, pp. 124–130), where an increasing volume of cross-border trade and contract enforcement is said to have led to the complex institutional framework that has brought about Western prosperity. Here, the researcher adopting North’s NIE lens might find a theoretical and politico-normative anchor—contracts and their enforcement in a Western European model that sets an efficient institutional path. The conceptual institution in North’s idea, as a product of efficiency-­ seeking human/organizational activity, is evident in seeing two forces that shape the path of institutional change and “shape the long-run path of economies” (i.e. path dependency): increasing returns and imperfect markets characterized by significant transaction costs: In a world in which there are no increasing returns to institutions and markets are competitive, institutions do not matter. If…the actors initially have incorrect models and act upon them, they either will be eliminated, or efficient information feedback will induce them to modify their models. But, with increasing returns, institutions matter… there are large initial setup costs when the institutions [without the formal/informal distinction] are created de novo as was the U.S. Constitution in 1787. There are significant learning effects for organizations that arise in consequence of the opportunity set provided by the institutional framework…The resultant organizations will evolve to take advantage of the opportunities defined by that framework, but…there is no implication that the skills acquired will result in increased social efficiency. There will be coordination effects directly via contracts with other organizations and indirectly by induced investment through the polity in complementary activities. Even more important, the formal rules will result in the creation of a variety of informal constraints that modify the formal rules and extend them to a variety of specific applications. Adaptive expectations occur because increased prevalence of contracting based on a specific institution will reduce uncertainties about the permanence of that rule. In short, the interdependent web of an institutional matrix produces massive increasing returns. (North, 1990, p. 95)

Should the institutional path that is adopted chart a long-run trajectory that approximates little to zero transaction cost, it is an efficient one according to North. However, in the presence of incomplete markets, fragmentary information feedback and significant transaction costs, it is

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the historically derived ‘mental constructs’ (ideas, theories, ideologies) of actors in an effort to decipher an uncertain environment that determine economic performance. The correct ‘legal model’ in North’s conception is that which leads to efficiency, and any other one taken on the basis of “incomplete information” and the legal actors’ “subjective and ideologically conditioned views of how the world ought to be” is not so. This is to say that the decisions taken on the basis of a competitive process that is intended for economic growth as an efficient outcome are devoid of the “subjective and ideologically conditioned views” of the actors involved, a claim that is itself based on the belief in market-based capitalist growth as one among alternative growth models. North’s assertion that institutions providing incentives for encouraging “redistributive organizations” (North, 1990, p.  99) lead to ‘inefficient path dependence’ is an example of his own ideological tendency—there is no overwhelming evidence that ‘redistributive organizations’ per se have hampered growth more than those which encourage wealth accumulation. In fact, there is growing consensus that income inequality negatively affects economic performance, and redistributive policies such as taxes are good for growth—see, for instance, Frederico Cingano’s study that covers member states of the Organisation for Economic Co-operation and Development (Cingano, 2014). By suggesting that the capacity to seek ‘efficient path dependence’ is distinct from the ideological and mental-­ subjective models of judicial actors, North also implies that the wealth-­ maximizing human rational behaviour is devoid of ideology, that is, if they are truly calculative it is when they pursue the maximization of the chances of economic growth through institutions in a competitive process, based on constant feedback. If not, they must be influenced by some ideology or their subjective models of “how the world ought to be”, which is self-contradictory (his ‘efficient path dependence’ is based on an ideal notion of how the world ought to be). Despite stressing that there is no implication in his ideas regarding the efficiency of formal rules’, and that rules are “at least in good part, devised in the interest of private wellbeing rather than social well-being” (North, 1990, p.  47),6 he nonetheless addresses this efficiency problem by suggesting that: 6  The ‘efficiency problem’ was also later addressed by De Soto (2000) and Acemoglu and Robinson (2012), among others. The latter more closely applies NIE epistemology, notably ‘path dependency’.

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The evolution of polities from single absolute rulers to democratic governments is typically conceived as a move toward greater political efficiency. In the sense that democratic government gives a greater and greater percentage of the populace access to the political decision-making process, eliminates the capricious capacity of a ruler to confiscate wealth, and develops third-­ party enforcement of contracts with an independent judiciary, the result is indeed a move toward greater political efficiency. (North, 1990, p. 50)

Alluding to Hayek, North gives primacy to the conditions for “maximum generation of trials” as a way to arrive at ‘adaptive efficiency’ (North, 1990, p. 81). The problem of the state’s role in such a system remains a dilemma: it is important as a third-party enforcer of contracts but can also cause ‘inefficiency’ by behaving impartially. Hence, “how does one get the state to behave like an impartial third party?” (North, 1990, p. 58) is a question that, according to Menard and Shirley (Menard Shirley, 2005, pp. 1–21), constitutes one main thematic area in NIE research in general. This is the kind of ‘minimalist’ state (Chang, 2002) that provides third-­ party enforcement “such that one has assurances that political bodies will not violate contracts of parties or engage in conditions that will alter radically the wealth and income of parties” (North, 1990, p. 59), and it would not directly engage in allocative decision-making, which might violate the imperative of guaranteeing property rights (or other attendant rights it entails). It is up to private owners of property to decide how to employ their wealth. And such interventionist measures as subsidies and tariff protection by the government are observed as “a mixture hardly conducive to productive efficiency” (North, 1990, p.  67). Though the state’s role is recognized in establishing the contractual requirements of long-distance trade in medieval Western Europe, it was a successful case only because the state was “bound by commitments that it would not confiscate assets or in any way use its coercive power to increase uncertainty in exchange” (North, 1990, p. 129). As a model of success, he states: The nineteenth-century U.S. economy provided a hospitable environment for economic growth. Just what made the environment hospitable has certainly occupied the attention of scholars examining the consequences of the Constitution, the evolution of the law, the role of the frontier, the attitude of both the native born and immigrants, and a number of other characteristics of the society that influenced incentives. (North, 1990, p. 136)

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In short, the establishment of ‘efficient’ institutions that is hospitable to growth is an executive act, provided it has ‘built-in’ incentives to create and enforce ‘efficient’ property rights (North, 1990, p. 140). In the discussion on knowledge, and its accumulation as per the prerequisites of the “incentives that are built into the institutional framework” (North, 1990, p. 77), we see the germs of an idea that goes beyond the limited scope that pre-given units of analyses inevitably impose on research. Considering the prominent conditioning role of the point of departure and the pre-given unit of analysis in North’s (and NIE’s) research, it is left unclear, however, how to empirically investigate these institutional incentives. That is: Where do they empirically reside? To wit, what should an imaginary alien do in a methodical order to investigate the effects of the institutional incentives derived from, for instance, the institution of piracy? Many of us on earth are already familiar, through cultural means, with what pirates do, and with the fact that they value the knowledge and skills for pillaging navigational lines, a somewhat unsystematic knowledge that then permits adapting, in accordance, the research effort when studying them (including a study of the institutional incentives that seem to ameliorate the skills for piracy). What about a researcher (in our case, the alien) who is entirely ignorant of the institution of piracy and its incentives? If (s)he factors human incentive as pre-given, and leaps over it, where must (s)he (assuming they are gendered) look to find out the presence of this institution and, more importantly, the subjective perceptions that shape institutional incentives of piracy? If (s)he looks at the outer manifestations of this ‘institution’ and works from it towards an ideal situation (where it is replaced by a more ‘efficient’ institutional environment), it might focus on the visible elements that encourage the perpetuation of such an institution. There is no other way except for the correction of the epistemological groundwork, in a step backward, by removing the pre-given assumption of human motivation. By the same logic, if we treat every individual human community’s strategies of provisioning as idiosyncratic for the purposes of empirical research (a necessary guard against unwarranted generalizations, even though there might be as many similarities among human communities as there are differences), the methodological point of departure would have to be an investigation of empirical human habitus that constitutes that community. The claim, therefore, that some NIE thinkers are aware of informal institutions and even apply them in research might overlook the above

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methodological point. It is not the case that this form of institution is not studied in this tradition. But this awareness abides by the theoretical point of departure and the underlying ontological assumptions of the theory, remaining committed to the NIE’s (or, to be precise, North’s) definition of institutions as external ‘constraints’ to individual humans (the methodological constant or ‘ersatz human’) while taking transaction costs in a market exchange as the point of departure. This is different than if we recognize the important distinction between the above four institutional categories. The latter line of thinking shifts the point of departure in the theory and subsequent research, leading to data collection that seeks out the embodied forms of institutions as well as the explicit formal ones. To summarize, if we concede ‘institutions’ (in all their forms) an independent existence that stands separately and acts as a constraint, to account for the thing that it constrains in theory and research, an extra pre-given element would have to be factored in, presupposed as a monolithic unit of analysis. In theoretically important NIE sources, this pre-given variable is the incentive of the ‘boundedly rational individual’. The mere admission of a substantive human rationality makes it, in turn, inevitable to see embodied and non-embodied institutions as things external to this pre-­given human rationality, found in the environment where the individual lives. As such, one is inevitably led to investigate the environment (the real environment, to be sure) where individuals live, in an aim to explain the effects of these environmental constraints on human social practice (in an economic setting, the individual’s production choice and exchange). This duality becomes necessary, and it inevitably leads to a substantive change in the direction the research takes.7 In this way, NIE research by design cancels out the milieu where categories 3 and 4 reside: individual in flesh and bone.8 7  This results in, on the one hand, ‘boundedly rational’ instrumental rationality as one reified element, assumed to be active (akin to a Leibnitzian monad) in a social event. And, on the other, informal institutions as another reified element that are active when they constrain the above’s activities. In real form, these two elements or at least the embodied forms of institutions are one and the same, the former constituted by the latter. An account of the real existence of an individual human and informal (implicit) institutions would have to consider the informal institutions under categories 3 and 4 as embodied to get rid of the above reification fallacy. 8  Not among NIE thinkers and long before the tradition was established, Herbert Simon does consider constraints to exist “within the skin of the biological organism” (1955). But he uses this assertion to argue for a modified version of rational choice theory (bounded rationality). The constraint he refers to is the physical and psychological limitations that constrain the number of choices the “organism” can exercise.

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Moreover, in a policy that is derived, directly or indirectly, from NIE’s definition of institutions, and carries its normative commitments vis-à-vis transaction costs to smoothen market frictions and enhance productivity (or to get rid of ‘inefficient markets’ according to North), the consideration of institutions as ‘environmental constraints’ throws the main weight of policy on the correction of these environmental deficiencies (to be sure, ostensibly both formal and informal environmental constraints), all along eliding the fact that implicit informal institutions, in real form, are empirically available in individual humans, constituting and reproduced through their habitus (Bourdieu, 2000) The details of policies derived from NIE’s institutionalist thinking would also, ideally, strive for an institutional environment that is conducive to market exchange in such a way to approximate the zero-transaction model of the neo-classical theory. The institutional ‘frictions’ in market exchanges would be removed to the extent that they would become irrelevant (the market becomes efficient). Doing so would require significantly different policy elements depending on the context. In one place where the market does approximate the zero-transaction cost ‘efficiency’ (the US financial sector might be one such example), the policy might require the government to, in fact, save the market from its own excesses by direct intervention (e.g. Dodd–Frank Wall Street Reform and Consumer Protection Act in reaction to the 2007–2008 recession). The policy element in such a case might have to reverse some of the ‘efficiency’ in return for guaranteeing the sustainability of the market. On the contrary, if a context approximates the reverse of the above (Afghanistan in the aftermath of the 2001–2002 changes), where market-based allocation itself is to a large extent absent, the policy necessitates an initial stage of creating a market economy, to then work towards making it ‘efficient’. Such a policy perforce aims for a radical rearrangement of the target society’s culture, politics and economy. The current book goes beyond the conception of institutions as ‘constraints’ and postulates institutional origin and changeability somewhere else. Particularly the roots of category 4 institutions—the main focus of the book—are sought in social structures that are transmitted to individuals in an embodied form. These structures appear more durable than the parsimonious ‘price theory’ in neo-classical theory might suggest. Not that their continuation is necessarily good or adverse, but their mere presence rests in social structures that largely work independent of the logic of market exchange and changeability in pursuit of wealth maximization.

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Category 3 and 4 institutions mostly do not have the same objectively perceptible capacity for independent existence outside an individual as ‘formal’ constraint, and are mainly found in her/him in embodied form (a point developed below). They may generate constraints as their outcome in certain fields of social life (as will be discussed in Chap. 7) but they are mostly not reducible to this definition. More important, the way they structure human behaviour in particular fields of social life can be explained by looking into the primary social structures that transmit these institutions. The importance of purposive intent is difficult to trace in how category 4 institutions develop partly owing to their origins in unknown history (whoever established ‘reciprocity’ in human society). Although the latter is admitted by NIE thinkers (see Williamson, 2000; North, 1990, 2005), this appears secondary to how the analytical institution is conceptualized in this tradition—partly because in such a case the insistence on ‘choice’ would become inadmissible, as would the affinity NIE claims to have with ‘choice-theoretic’ neo-classical economics (see North, 1990). In addition to NIE’s epistemology that limits its research scope, category 3 and 4 institutions are also not as present as ‘formal’ institutions so far as the subject matter of rational choice economics is concerned to which NIE aims to contribute. The intellectual field this tradition aspires to is mostly empty of the rather messy probing into the multiplicity of human normative constitution. Meanwhile, while ‘uncertainty’ can be reduced by establishing deliberate rules of conduct, the highpoint of such thinking being the legal framework, this does not explain cases where institutions are well established, but can increase uncertainty in “human landscape” to some, whilst giving the uncertainty-to-risk conversion capability to others (e.g. slavery, or modern-day labour flexibility as a category 3 institution, growing mostly out of category 1 institutions). The significance of ‘formal’ institutions in advanced capitalist societies, where most aspects of allocation and market exchange are legally defined, also means that examination of the reduction of uncertainty and transaction costs would perforce focus on this form of institution. This is reflected in the areas the introduction to the Handbook of New Institutionalist Economics includes as NIE’s growing scope after three decades of its inception (Menard and Shirley, 2005). Concerning the subjects covered in the book, with the exception of two essays, the remainder focus on formal

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institutions, also witnessed in Williamson’s 2000 important essay regarding the past, present and future of NIE as a tradition. The core methodological horizon of NIE, including its analytical usage of institutions, is therefore guided by a preoccupation with an original subject matter (transaction cost) which characterizes its theoretical imagination by taking the ubiquity of ‘formal’ institutions for granted9 (see Coase, 1960; Williamson, 2000, 2005; Shirley, 2005, for such examples in NIE). This might be warranted in societies where ‘formal’ institutions are well developed, but its analytical tools might not be suited for application in societies where this form of ‘rationality’ as an ideational outgrowth of capitalism is yet to fully emerge (due to long periods of political violence, in addition to the liberal market economy’s novelty as an economic system in the case of Afghanistan) and social norms and beliefs as embedded components of habitus govern economic activity.10 The above methodological point, however, mostly does not preclude NIE’s research being led by a desideratum to prescribe through explanation, including areas such as transaction costs, the compatibility of the property rights regime with productivity, and the combination of hierarchical and market-based resource coordination, but also—and most consequentially for the topic at hand—the (non)institutional pre-requisites for economic development, including through historical analysis as a means of bridging the gap between the developed and the ‘underdeveloped’ parts of the world.11 This prescribing tilt further limits the extent to which ‘informal’ institutions are accounted for by NIE as analytical tools in and of themselves, while implicit or explicit policy commitment is sine qua non in this tradition owing to its origins—accounting for the hindering effects of market ‘frictions’ before choice-theoretic neo-classical

9  As a side note, I maintain that ubiquity of “formal” institutions is itself one institutional element that is comparatively more likely to structure individual habitus—as embodied and in a spontaneously generative sense—in a society where it is present and the realm of codified law is expansive (e.g. the United States, Japan, Western Europe) than where it is yet to emerge and social life is governed by custom (e.g. Afghanistan). 10  Even where formal rationality has developed and predominates social life, it remains to be seen to what extent social norms, conventions and belief systems influence resource allocation and economic activity (a problem that needs addressing by researching social institutions in capitalist economies and not just the role contract or competitive price plays). 11  This last topic being, as per Engerman and Sokoloff (2005), the most significant contribution of NIE.

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theory would become admissible. Such areas as norms, conventions, power, hierarchy, (in)equality and productive life of a society might enter the researcher’s imagination insofar as they imbricate NIE’s principal concern with how market exchange is made efficient. This is when ‘informal’ institutions have important—and central in the case of this research—significance for the task of explaining resource allocation as such. Some discussion of path dependency is also necessary because it is relevant to the methodological point and the policy-related conclusions of this book. Regarding method, focus on the ‘empirical human’ is partly dependent on how grand historical narratives accommodate a place for them—adopting path dependency might make presently living and breathing ‘empirical humans’ irrelevant as objects of research because the process of history is given the comparatively larger agency. Moreover, the political subtext of path dependency as a social scientific method is important, as it might propel a deterministic view that is also normative (only certain forms of institutions might ensure success), evidenced in the following: … where countries are today affects where they can go…Social and political factors affect the pace of change, and sweeping reforms are not always possible. It is important to work on the areas where opportunities present themselves; each step can take countries forward—if correctly designed [emphasis added]. (World Bank, 2002)

This view closely echoes North’s thinking and the primacy he accords historical processes as origins of path dependency, which, when leading to a policy outcome, can provide strong justification for the policy against any tampering even if it seems not to yield the desired objective after a good amount of experimentation (two decades in Afghanistan), with the reasoning that in long-term history the policy shift(s) might prove to be ‘inefficient’ (look at how Mexico fairs poorly!). Important works by NIE thinkers are quite explicit regarding what constitutes ‘success’ and ‘failure’ (see, e.g., North, 1990; Acemoglu and Robinson, 2012). Given this, an articulation of ‘success’ entails cautionary subtext against disobeying the successful historical models, even though this is not stated in explicit terms and such an implication could not be anticipated from applying path dependency as a tool of inquiry. The above schematic representation is not complete, and the level of analysis is not as clear-cut as this might suggest (NIE thinkers do not

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disregard norms and beliefs entirely in their research as discussed above). This diagram summarizes the main focal point of the explanatory institution, the issues of method owing to the point of departure and the pre-­ given unit in NIE in research, shaping its level of analysis (Williamson, 2000).

3.1   Constitutive Institution The other school of institutionalist political economy, OIE, offers a nuanced perspective on institutions, yet remains largely concerned with the ‘formal’ kind (this time, the institutions of the state). According to Ha-Joon Chang (2002), many of the “social conventions” as “informal” institutions are also amenable to integration into the debate on the legal system. Institutionalist research in this tradition is mostly in the context of investigating combinations of state-market management of the economy in contrast to the one centred on market exchange as in NIE. This research project has found its intellectual moment owing to the reversal of the state’s role in the economy under a concerted ideological and political setback since the 1970s–1980s. OIE’s intellectual contribution is mainly intended to provide a counterargument to the market-oriented ‘neo-­ liberal’ trend by taking the public sector’s role in managing markets as a point of departure. The fundamental difference retained between OIE and NIE so far as method is concerned is that the former sees institutions as temporally precedent to individuals while NIE sees them as a descendant of human choice-based activity (Chang, 2002). According to one proponent of this tradition, institutions are “systems of established and prevalent social rules that structure social interactions” (Hodgson, 2006)—a definition that is richer than “rules of the game” given its reference to social structures. More significantly, this tradition adopts a method that takes time and space (i.e. historical, and geographical location) as important explanatory elements. Although some general concepts are thematic to this tradition— knowledge, power, evolution, open systems—thinkers in this tradition link their exposition to real economic and social processes (Hodgson, 2002, p. 19). Markets themselves are considered one among a set of historically specific institutions in this approach (Hodgson, 2002; Chang, 2002). In contrast to equilibrium and the steady-state orientation of much of RCT-­ based textbook economics, the “evolutionary” lens adopted in this school emphasizes processes, changes, structural transformations and justification of assumptions underlying concepts by showing a historical-evolutionary

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process leading to them. If such a justification is not available, research is said to continue regarding the concept. Theory in this tradition, in general, is rarely assumed as complete given that not all causal relationships are amenable to fit into the theoretical picture in social sciences (Hodgson, 2002, p. 20). One reason theoretical boundaries are not all-encompassing is that open and complex social systems exhibit “novelty” (Witt, 1992), which means variation and diversity are normal parts of social order and it is through constant interchange across the boundaries of the system that new and emergent properties come into being (Witt, 1992; Saviotti, 1996; Metcalfe, 1998). This implies that no social entity is taken as given, which entails constant research and theorizing to come up with new analytical tools to study a social event, domain or entity, for instance human rationality, which cannot be assumed as having dropped from nowhere. A particular historical context should be laid out as to how, where, with what type of content, and within what kind of socio-cultural context it has taken shape. If humans are admittedly ‘ersatz humans’ as per RCT, this rationality depends upon prior habituation, according to OIE, and this closely aligns with the concept of habitus (Bourdieu, 2000). According to Hodgson (Hodgson, 2002, p.  23), OIE abandons the dichotomy between the individual and social structures; neither individual nor structure is taken solely as explanatory variable for social practice. This opens the way for studying the interaction between individual agency and structure. As such, both institutions and individuals are taken as units of analysis by theorizing a “double movement” in the relationship between them. The effect of institutions on individual humans is called “downward causation”, while, given that OIE does not take individuals as mere receivers of institutional effects, there is always “upward causation” that begins at the individual level and affects institutions (Giddens, 1984). Individuals are moulded by experiences, preferences, cultures and institutions and at the same time engage in a “moulding” activity from their level upwards (Fig. 3.2).

3.2   Institution as Reified Fallacy While in NIE the concretized imagination of institutions as constraints is fairly common, in OIE too, due to reifying an idea (institutions) as something residing outside the individual, some degree of an aware interactive encounter with institutions on the part of the individual has obtained—the

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F

F

Category 2, 3 and 4 Institutions

F

F

Evolutionary/Empirical Interest

C/C

A F

C

Unit of Transaction

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Category 2, 3 and 4 Institutions

C/C

B F

Fig. 3.2  OIE institutional schema. (Legends: All Fig. 3.1 legends apply except C/C, which in this case symbolizes both a constitutive and constraining relationship)

concept of “structural determinism” (see Chang, 2002) also arises out of this misplaced concreteness. The statement by Hodgson regarding institutional effect as the ‘downward reconstitutive causation from institutions to individuals’ (2002) can be viewed from this perspective, which imagines a form of iterative interaction between institutions and the individual who, through these interactions, would inevitably have to stand on something— I claim the theory to consider an innate natural rationality similar to NIE. This claim finds at least partial support in Chang’s (2002) statement that OIE’s (or IPE, as he calls it) “…emphasis on the constitutive nature of institutions should not [emphasis in original] be interpreted as meaning that people’s motivations are more or less determined by the institutional structure” and that “individuals also influence the way institutions are formed and run, as is typically done in NIE”. OIE, although it encompasses a relatively comprehensive notion of institutions, does not fully escape from considering a duality between individual and institutions, which is applicable to the first three institutional categories (explicit formal, explicit socio-structural, implicit formal) but not to embodied or implicit socio-structural institutions. This uniform treatment of institutions allows for OIE too to postulate instrumental policies to modulate them,12 and through them the individual (see, e.g., Chang, 2002). The frequent reminder in OIE literature13 of the role of 12  This is best encapsulated in this statement by Street (1987): “good theory makes for better solutions”. 13  For instance, in a 2002 essay in which Ha-Joon Chang introduces Institutional Political Economy, he names other sources in the tradition (e.g. Lazonick, 1991; Evans, 1995; Block, 1999; Chang and Evans, 2005, Burlamaqui et al., 2000), all focusing on ‘formal’ institutions as their primary explanatory element.

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the state institutions suggests an epistemology that is aligned with NIE inasmuch as they both focus predominantly on the first and third categories of institutions.

3.3   Embodied (Implicit Socio-Structural) Institutions To begin, the conception of institution used in the book defines it based on their relative distinction along implicit (embodied and inter-subjective) and explicit (definable and objective) lines as social-relational ordering mechanism with codified and socio-structural modes of transmission. Implicit and explicit refer to its presence in subjective or objective form, the former dependent on human inter-subjective activity, the latter no longer dependent on human mind for its effective presence (though its effectiveness does rely on human mental activity). Concerning norms and rules, the former corresponds to implicit (embodied or inter-subjective) institutions and the latter to explicit (objective). To elaborate, explicit institutions (categories 1 and 2), by virtue of having the capacity to be represented objectively, can be declared and transmitted in a visible form and with definable properties. What is meant by an ‘objective state’ of explicit institutions is, in its most common form, a legal register where meticulous abstract content in logically non-contradictory detail is recorded by the legislator regarding the ‘what, where and how’ of permitted and prohibited practices. For example, the regulations on driving a vehicle include the legible codified laws in the society’s common language supplemented in visible form by the signs posted along the road and the numerous instructions built into a car’s internal system indicating what actions are permitted or forbidden. Explicit rules in general have an objectively representable capacity that makes an intentional definition of them accessible, that is, a definition that provides necessary and sufficient conditions for an institution to be called so. For example, the rule implied by “red traffic light” can be defined as a “red light on public roads that, when turned on, forbids cars facing it to advance further”, a definition that states both a necessary and sufficient condition for an object to be called a “red traffic light”. The intentional definability and non-­definability of an institution is the main distinction between explicit and implicit institutions. Institutions structure social interactions as constraints to the

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extent that they have an intentionally definable capacity, which mainly applies to the first and second categories but not to the same extent as the third and fourth categories. When it comes to customs and traditions which are often inter-­ generationally verbally transmitted, a clear one-time enunciation in words in understandable language constitutes, at the least, the objective form of this type of institution among members of a community (e.g. “Do not drive too fast when you enter a crowded bazaar”, which provides both sufficient and necessary conditions for the regulatory institution of “driving speed amid crowd” in society A). Explicit institutions are also shown with other semantic symbols that, in the end, rely on language for explanation (e.g. traffic signals). This set of institutions is, in principle, dependent on being displayed and transmitted in an objective form to have and retain an ordering effect. Without this explicit transmission, a person can be excused for not following them. This category includes mostly laws and regulations as important aspects of formalized social rules which, as Weber points out, have a “coercive apparatus” ready to “apply specially provided means of coercion (legal coercion)” for their enforcement (Weber 1978, p. 313). A notion similar to Durkheim’s definition of ethics that refers to them as “rules of action imposed categorically on behaviour to which punishment is attached” (Durkheim, 1984, p. 15). The components of coercion and punishment are integral to rules, also applying to those customs (second category institutions) that do not fall within the domain of state legal apparatus for enforcement but have other mechanisms of enforcement (e.g. the customs governing the matrimonial relationship being enforced by the community in Afghan society primarily through the authority of elders). Due to it entailing coercion and punishment, an awareness of explicit institutions must be relatively comprehensive, that is, the individual(s) expected to act upon them should receive them in some clear semantic form, be able to define them upon learning, discuss their properties in some detail, and know the kind of ordering effect they are intended to produce. It is, therefore, possible for the individual to provide an ‘intentional’ definition of this ordering mechanism. Implicit institutions (categories 3 and 4), on the other hand, are embodied and transmitted through social structures, functioning as little more than aspects of the individual’s relation to an objective circumstance

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as such.14 They exist in an embodied sense and as a practical form of social knowledge. They correspond to norms that exist in an inter-subjective state, transmitted through social structures, and enacted through practice, while their understanding by social agents remains at an apprehensive level; there is an instinctual awareness about them which is often not amenable to an intentional definition. Even though they are categories that constitute and structure human behaviour in the same way as rules, they differ from rules in that their enforcement does not involve a coercive state apparatus or another mechanism of power, while a clear punishment has not obtained or does not ensue from implicit norm violation. Even if an occasional punishment ensues in this case, it is most often of a different kind and is devoid of the degree of severity linked to explicit rule violation. Forms of socially accepted penalty might result, its practice dependent on an arbitrary optional tendency in the person deciding to penalize and often not certain to occur. For example, someone living in society ‘A’ penalizing someone else who has not abided by a variant of the norm of reciprocity specific to this society (in case this act does not inflict a clear punishable harm), in which case the most likely retribution might be ‘harm to reputation’ of the violator. This is much more subtle than the degrees of penalty in case of violating rules such as respect for private property (theft) or the sanctity of marriage (adultery), for whom the nature of punishment, often in exact terms and codified in legible text, is well defined and on hand. Pertinent to the current research, implicit socio-structural institutions function mainly as taken-for-granted purveyors of practical knowledge that are socially contingent and have developed piecemeal through a community’s history, are subject to accidental events, and are not products of conscious human intention for reducing uncertainty.15 14  I should distinguish this and the notion that defines institutions as ‘equilibria’. Although the latter too considers institutions as existing in an embodied state (see Crawford and Ostrom, 1995), it does so mainly in the attempt to avoid doubts concerning the explanatory sufficiency of the individual in line with ersatz humans. The embodied understanding serves to subsume norms in the pre-given ersatz human rationality, denying them the place as explanatory elements. 15  In fact, this point is partially also applicable to deliberately established explicit rules whose function is to endow an act with a commonly understood order-giving meaning regardless of whether its actual enforcement reduces the kind of uncertainty to which it corresponds. Instituting a penalty for robbery, to illustrate, does not reduce the uncertainty regarding someone’s house getting robbed—such an entailment does not follow by the act of instituting ‘protection of private property’ as an explicit rule.

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On another note, the distinction that underpins the establishment and transmission of institutions brings the importance of social structures to the fore, particularly in relation to implicit institutions. The process involved in establishing a norm mostly comes down slowly and gradually over time, the norm itself being always in-the-making and evolving presently, yet effective enough to generate a socially significant ordering effect by virtue of the commonality in the social structure that transmits it. Collective deliberation, consensus (or coercion) and agreement (or compulsion) are not present when it comes to how implicit institutions have emerged and presently exist. This is not the case with explicit institutions considering that they are a product of some level of conscious deliberation, consensus-building (or coercion) and communal agreement (or compulsion). Not necessarily by those presently acting upon them but the collective nature of it is, nonetheless, re-affirmed presently through some form of common procedure based on a shared knowledge. For instance, all adult members of a certain age being required to obtain a driving licence if they wish to abide by rules governing the act of driving. Explicit institutions are, as such, the products of their historical conditions due to them reflecting an objectively visible form of “constraint” in the environment, which makes them not easily transmittable to other objective conditions unless some measure of mis-adaptation or outright coercion is factored in. Particularly, they can be deliberately changed to better adapt to new conditions by those acting upon them with relative ease when not supported by another factor, such as a belief that holds them sacred. Dependence on “social structures” for implicit institutions’ transmission means that not all societies transmit the same type of these institutions, which explains their difference in different societies throughout time and space. In regard to such cross-contextual institutions as ‘trust’, ‘altruism’ or ‘reciprocity’, they are likely the product of some original universal social structure common to a wider human population whose precepts have generated a relatively widespread implicit knowledge of these institutions, making their currently taken-for-granted awareness possible. Perhaps there are still cultures on earth that have gone through history autonomously, residing in a silo vis-à-vis the more widespread universal culture, where ‘trust’, ‘altruism’ and ‘reciprocity’ as implicit institutions are entirely absent. What is meant by embodied is the existence of these institutions in relation to recurrent practices (or their opposite). To illustrate this point, consider ‘trust’ as a norm that among a community that adheres to a particular

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form of it generates an ordering effect in social relations. Trust in this community is not a substantive quality that constrains individual ‘A’ and ‘B’s relationship in a, say, economic transaction by giving it a momentary stability. Trust as a collective institution, in a general sense, organizes and orders the relationship between a multitude of individuals in their dealings. What it signifies in this community can be defined only as an intrinsic component of A’s relationship with B beyond which it does not exist (it does, but merely in a nominal sense). The same can be said for other implicit institutions that are embodied by individual ‘A’ and ‘B’ in their real form, their existence manifested through the actual relational experience and disappearing when not acted upon. This viewpoint suggests that to A and B, an intentional definition of trust is available by observing it in relation to an act, when trust is enacted, or, more commonly, felt, within that relationship. But defining trust in words by them, if they consciously ever contemplate it, would require use of other words or posing it in relation to ‘distrust’, which in themselves require definitions ad infinitum—an intentional definition of trust is therefore mostly unavailable to the members of the community, the only population of humans whose subjective experience of trust matters, I think, in a study that treats them as the object. Institutions in this sense, rather than giving meaning or constituting/ constraining an act, are the practical everyday knowledge of these acts that are implicitly present among a collective to whom this definition is mostly made available recurrently in an embodied way. This point is better understood when implicit institutions are set against explicit institutions (rules, laws and regulations), the latter existing in meticulous linguistic detail in such a way as to counter the norm-based social-structural interpretation that is carried over through individual habitus (it is meant to oppose the human impulse to interpret them based on whim). Likewise, a separate domain of relationship does not exist independent of the element we call trust in this instance. It is the relationship (akin to a rope) or a constituent part (a strand in a rope) when conjoined with explicit institutions or other norms such as precautionary reserve, human fellowship, belief in the sanctity of a bond based on a religious principle, or competitive urge based on pursuit of self-interest when all are activated in a single unit of interaction. Human ability to think and reason to establish a relationship with another human is constituted by a multiplicity of institutions, all of them in a position to be activated depending on the relationship with the objective circumstance (i.e. the proverbial ‘game’ in NIE parlance)—including

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the norm that suggests humans are self-seeking utility-maximisers which can exist in varying degrees in different societies in relation to different circumstances through various manifestations which embody this trait. This makes it incumbent on the inquiry that studies implicit institutions to discover them first before factoring them into the conceptual apparatus. This discovering act, as will be shown in the empirical section, is vital because therein lies important evidence for explaining both the foundational step to enter an action arena (investment in manufacturing in this research) and the subsequent continuation of it. Without it and with an ex-ante assumption regarding investors as abiding by one universal tendency (profit maximization), the research would be perforce limited to explaining the myriad “irrationalities”16 investors engage in due to their actions not aligning well with what the theory states. This presumptive epistemology replaces what is real with what seems consistent as a logical abstraction—a case of confusing “the things of logic with the logic of things”.17 Moreover, conferring institutions a separate existence might allow the researcher to create a generalizable research framework through superimposing a particular assumption on the presumed “non-institutional” (so-­ called rational) part of human behaviour—as Ostrom (2005) attempts to do—but its utility for different contexts is subject to the same weaknesses as the application of any other framework derived from universalizing assumptions. Considering institutions as ‘embodied’ helps avoid the reification fallacy that concedes a separate existence to implicit institutions, a view that makes it less problematic to also think of them as easily amenable to manipulate or, if not that, to cast aside as an area too obscure and messy for research. The approach in the book merely places the empirical field where it ought to be based on the distinction between the four categories enumerated earlier in this chapter. By this, the intention is to direct focus from research problems which are informed by a normative commitment 16  This methodological ‘misplacement’ is better explained by the lost needle allegory, according to which the person who has lost a needle in a dark room but searches for it outside under the moonlight responds to a passerby’s questioning of this absurd behaviour: “but I can see things around here!” NIE, in line with RCT epistemology, locates human nature in a pre-given milieu where it can see it, in an attempt to then construct models based on this ‘moonlight visibility’—its effort to re-introduce real in its theoretical formalizations, therefore, eschews including real (i.e. empirical) humans. 17  A phrase Bourdieu borrows from Marx (1990, p. 49).

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F

F

Explicit Formal Institutions C

Evolutionary/Empirical Interest

Embodied Institutions

Unit of Transaction

A

B

Embodied Institutions

Fig. 3.3  Book institutional schema. (Legends: All Fig. 3.1 and 3.2 legends apply. The darker shade of black signifies the domain of embodied institutions, the larger shape signifying the individual her/himself)

regarding some right set of ‘formal’ institutions, to problems informed by an empirical commitment necessary for research on humans in their social context as a means to explain, albeit provisionally until a better explanation comes along, their behaviour based on observed regularities in data. This, in itself, bears the fruits of a politically destabilizing critique but at the level of evidence-based theory—in line with what Bourdieu calls ‘socioanalysis’ (Bourdieu, 1990)—uncovering what is latent in social life (Fig. 3.3). As with any schematic representation, this omits much detail, particularly the process of institutional change. The concept of institutions adopted here does not assume them as reproducible in a circular way (that would negate historical change), given that habitus is an ever-changing social phenomenon. A set of already present pre-reflective institutions embedded in social structures is incompatible with the process of change. And institutions bear the potential to be altered through human learning ability, including the ability to practise new norms and beliefs through experiential exposure or through didactic means—which can dislodge entirely or moderate existing institutions.18 Early social education 18  How education achieves normative moderation or the dislodging of the primacy of a norm (e.g. gender binary) may partly depend on a process based on the following three characterizations: normative dis equilibrium (preferring but not persuasively in support of gender binary), normative indecision (explicit denial of knowing whether the gender binary or its negation is the ‘right’ norm) or normative doubt (explicit questioning of whether the gender binary is the ‘right’ norm). Each of the above is liable to lead to a subsequent state of normative moderation or dislodging. I should note that this explanation is only partial and

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(internalized by and shaping habitus), moreover, accounts for why these norms and beliefs come about in the first place, before becoming prereflective and relatively spontaneous through time. The mechanisms of this change as a structured process based on individual habitus will be discussed below.

3.4   Bourdieusian Framework; Habitus and Field The preceding exploration makes use of a few concepts apposite to the analysis of data in this research that are mainly developed by Pierre Bourdieu through his empirical fieldwork in Algeria and the Béarn (Grenfell, 2008a). These concepts’ role is to situate institutions (here I move the discussion towards the implicit socio-structural form of it given their significance in the research) in social structures. The central device for this purpose is habitus primarily but also field (a social ‘microcosm’) and different forms of capital (‘economic’, social, cultural and symbolic) (for a discussion of the ‘intellectual field’ as an earlier iteration of this concept, see Bourdieu, 1971). A fundamental distinction of Bourdieu’s ‘theory of practice’ is his break with substantial concepts that privilege things over relations which tend to reify the social order, and to essentialize social phenomena (Mohr, 2013). He puts forward a relational epistemology that studies the agent within mutually constitutive effects of idea and corporeal practice. Bourdieu’s concepts are better understood as “heuristic devices”, according to David Swartz (1997, p. 5). Through the lens of Bourdieusian concepts, “active institutional elements” (AIEs hereafter) are introduced here as an operational conceptual framework for analysing patterns in research data. Considering the multiplicity of embodied does not include normative stability (only accepting and making explicit the negation of the gender binary), which is likely to lead to a rejection of the process of change or normative relapse following a period of change. I will leave this for future discussion, but tentatively and as a sketch, I postulate the following salient causes of institutional change: (a) contingent events: events occurring in nature (including in human society) regarding which internalized pre-reflective institutions are unprepared, for example an unforeseeable viral pandemic that overwhelms any number of previously held norms and beliefs; (b) exogenous institutional overlaps: the process of gradual encounter between an individual’s norms and beliefs and new laws and regulations, education (including formal and informal, the latter encompassing tacit and explicit forms of social knowledge), and other individuals’ norms and beliefs; and (c) exogenous material change: the process of growth of economic resources and technology leading to exposure to new sets of opportunities and experiences previously unattainable or unavailable.

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institutions, the term “active institutional elements” suggests the prominence of the norms that are active in a single unit of a social event. I use AIEs to explain the knowledge of professional opportunities transferred in an embodied lived experience through the effects of institutionalized behaviour of individual habitus. To take a step back, considering institutions as embodied “rules and roles” (a la Lukes, 1968) in any unit of social interaction, the question arises as to where lies the source of the cognitive and embodied form of institutions (i.e. implicit institutions) considering that explicit institutions are enforced by some form of coercive apparatus. How to tie these institutions with habitus and field, themselves aspects of social structures? For an answer, let us return to Bourdieu’s definition of habitus as: …systems of durable, transposable dispositions, structured structures predisposed to function as structuring structures, that is, as principles which generate and organize practices and representations that can be objectively adapted to their outcomes without presupposing a conscious aiming at ends or an express mastery of the operations necessary in order to attain them. Objectively ‘regulated’ and ‘regular’ without being in any way the product of obedience to rules, they can be collectively orchestrated without being the product of the organizing action of a conductor. (Bourdieu, 1990, p. 53)

This system operates as a “structuring structure”, that is, it operates as a: System of circular relations that unite structures and practices; objective structures tend to produce structured subjective dispositions that produce structured actions which, in turn, tend to reproduce objective structure. (Bourdieu and Passeron, 1977, p. 203)

As it is most consequentially shaped during childhood (i.e. early socialization), Callinicos suggests that habitus is not thought of as anything near consciously held beliefs, but is “quite literally embodied”, and can be articulated as “social necessity turned into nature, converted into motor schemes and bodily automatisms” (Callinicos, 2012, p. 296). This “motor scheme” is manifested in tastes, in the ways people comport themselves outwardly, dress and make distinctions. Habitus functions unlike an explicit grasp of a proposition but as an implicit competence, a practical ability in actors to deal with a range of situations which cannot be reduced to the conscious observation of a set of rules. Understood as internalized ‘dispositions’, some products of habitus generate socially significant order

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among individuals in a social interaction, where lie the origins of implicit institutions. Objective social structures “deposit” (a la Bourdieu) in habitus all forms of practical capacity, including socially institutionalized behaviour. However, habitus’ ‘production’ implies the generation of subjective dispositions that also underlie institutionalized practice that reproduce the social structure that was the initial cause of its production. However, in a constant dialectic between habitus and its institutionalized practices, “there is constantly created history that inevitably appears, like witticisms, as both original and inevitable”, given that the dispositions of habitus “can be a source of mis-adaptation as well as adaptation, revolt as well as resignation” (Bourdieu, 1990). In other words, the conditions producing the habitus are reproducible in a near-circular way only if the conditions of its functioning are identical and “homothetic” with the original structure. The progression from social structure structuring human disposition (habitus) to the structured structure reproducing the original structure does not proceed neatly and is mediated by the objective conditions in whom the “conductorless orchestration” of habitus functions as a scheme of practice that is pre-reflective, a level below consciousness and language and “beyond the reach of introspection or control of the will” (Bourdieu, 1984, p. 466). To better explain adaptation and distinction (reproducing the social structure or deviation), Bourdieu explains habitus as a system of dispositions that is marked by “virtualities, potentialities, eventualities”, and only in reference to definite situations. It is only “in the relation [emphasis in original] to certain structures that habitus produces given discourses or practices” (Bourdieu and Wacquant, 1992, p. 135). This means that from this set of “virtualities, potentialities, eventualities” any number of decisions can spring up (e.g. two members of the same family taking vastly diverging paths in life even though the conditions that structured their dispositions during childhood are largely similar). Habitus is not always determinant of the agent’s social practice and can be superseded by moments of crisis, explicit rules or situations where “the stakes are so high and the chances of rift so great that the agents dare not rely entirely on the regulated improvisation of orchestrated habitus” (Bourdieu, 1990, p.  182). These instances do not permit for habitus’ spontaneous adjustments and require conscious calculation or explicit obedience for their resolution. Yet, even in such moments the responsiveness is said to be adapted to the strategies in whom the effect of habitus is

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discernible (Swartz, 1997). Hence, habitus can produce both institutionalized practices and anti-institutional ones, social and personal behaviour. It is the institutionalized form that is the focus of this research. Habitus is part of Bourdieu’s social scientific epistemology, a science that according to Michael Grenfell is based on a “coincidence” [emphasis in original] between an individual’s connection with “both the material and the social world” that consists of the “structures of the primary sense, feeling and thought—the intentional links that are established between human beings and the phenomena, both material and ideational, with which they come into contact” (Grenfell, 2008b). Grenfell writes that “this phenomenological structural relation is a product of environmentally structural conditions that offer objective regularities to guide thought and action—ways of doing things” (Grenfell, 2008c). The structured structure implies a non-static state of this mechanism, while the structuring structure quality gives it its generative potential to produce thought and action. Regarding the question at hand, the term captures the twin factors of structure and agency underlying institutionalized behaviour. Insofar as it operates merely as a thinking tool, the concept does not presuppose a substantive epistemology by building a model that works from an essentialized “structured structure” as a universal structure that traverses time and space. Hence, the only instrumental rationality in RCT is replaced by it with a richer, yet taxing, epistemology that accommodates a multiplicity of ‘instrumental’ rationalities, including but not limited to the one seen as the main rationality in RCT. Hence, the concept relies on empirical research to give it analytic content and efficacy. By it, social scientific research becomes relatively more complex, where it has to abandon a pre-­ given epistemological pre-occupation of basing all explanatory elements on ‘ersatz human’ at the micro-level as the legitimate unit of analysis (Lukes, 1968)—and replace it with a commitment to empirical research. Research on real humans would require taking the context of reality seriously, including its messiness that mostly evades parsimonious unitary explanatory elements. In sum, pre-existing social structure structures an individual’s behaviour, way of understanding his environment, perceiving, and appreciating rules and roles, which then reproduce the structures through the individual agency (her/his strategy) that produced them only if the conditions are homothetic. Social dispositions liable for transfer guide and structure individual decisions in ways that are not consciously realized. They don’t function as limits to some abstract form of rationality. They are constitutive to

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the extent that they are the orienting motives of individuals per se and not as a priori and consciously designed conditioning factors. “Field” (champ), on the other hand, is another concept that Bourdieu develops with which he intends to bring habitus in contact with the objective conditions of practice. He defines field as: …a network or configuration, of objective relations between positions. These positions are objectively defined, in their existence and in the determinations they impose upon their occupants, agents or institutions, by their present and potential situation (situs) in the structure of the distribution of species of power (or capital) whose possession commands access to the specific profits that are at stake in the field, as well as by their objective relation to other positions (domination, subordination, homology, etc.). (Bourdieu and Wacquant, 1992, p. 97)

The concept delineates the multiplicity of relatively autonomous “social microcosms” of objective configurations that form the totality of the “social cosmos”. It is the “objective network and configuration of relations” (Grenfell, 2008) in Bourdieu’s theory of practice. While habitus is structured by the objective conditions of the field in an ongoing process, the field itself is understood through the prism of habitus. The structuring structure (field) is therefore understood through what it actively produces (habitus): On one side it is a relation of conditioning [emphasis in original]: the field structures the habitus … on the other side, it is a relation of knowledge or cognitive construction. Habitus contributes to constituting the field as a meaningful world. (Bourdieu and Wacquant, 1992, p. 127)

The concept of field has seemingly grown out of a concern to deal with highly differentiated societies due to the concept of habitus being inadequate for this task, a concept that was initially conceived to deal with the Kabyle in Algeria during Bourdieu’s early anthropological work (for elaboration, see Swartz, 1997, pp. 95–142). Its use here is warranted as part of the application of the Bourdieusian framework to go some way in constructing the “social microcosm” of the manufacturing sector in Kabul’s economy. With the concepts of habitus and field, Bourdieu aims to resolve the dichotomy between the strictly rule-based structuralist and anthropological account of human action—the ‘infinite textuality of social life’— and that of the existential free-to-choose version based on personal

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volition, the epistemology of universal rationality of RCT underlying methodological individualism.19 With this, he theorizes the ‘strategy’ individuals apply that is explained neither entirely by rule-based total obedience nor by calculative choice but by an adaptation of expectations to the range of possibilities, the practical knowledge of which is made available through the lived experience in an objective condition. This conceptual lens situates the interestedness of the individual agent in the social context of her/his being, that is, the private investor’s interest even in a domain ostensibly ‘economic’ such as manufacturing is a structured and structuring practice according to a Bourdieusian framework. If interest is understood in a sociological sense of being the multifaceted motivational engine behind the actions of any individual agent in society (Grenfell, 2008; Swedberg, 2003), every individual agent’s action is purposive and interested, whose definition is irreducible to computational and calculated utility-maximization. This flows from an epistemology by which human rationality (the subjective element) and physical conditions of her/his being (the objective element) are explained by building a framework that constantly works back and forth between the two layers (Grenfell, 2008). It treats human subjective functions in an embodied objective existence and the objective functions of the individual’s material existence as a reproduction of the subjective. In a simplified sense, “thinking process” is the thinking process of an object while the object is the basic component or production of the thought process. This may appear to be a commonplace proposition. But it has an important effect for research regarding what Patrick Murray (2020) calls a “reproducible provisioning process” in a society (i.e. the economy). By admitting to seeing the economy as constituted by “definite forms” of life-­ expression or mode-of-life (lebensweise) as stated by Karl Marx and Friedrich Engels in The German Ideology (1998), research is extricated from remaining committed to “thought processes” with little in the way of historically specific objective evidence to stand on. For an institutionalist reading of social practice, application of a Bourdieusian framework opens the possibility of building the normative and rule-based content embodied in human action, including the calculation of “cost and benefit”, that is, use of the framework makes it necessary 19  Not that he disregards this conscious capacity (see Bourdieu and Wacquant, 1992, pp. 130–135); rather, he considers it reductionist to assume it as a universal tendency as an epistemology—which treats humans as uniform and easily replaceable automatons.

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to ask where any particular content comes from. The concept of habitus and field together with three forms of capital other than the ‘economic’, namely symbolic, cultural and social capital, in line with his “theory of practice” explain institutionalized ways of conduct. Formally, Bourdieu states his theory of practice using the following equation (Bourdieu, 1984, p. 101): [(habitus)(capital)] + field = practice. The equation encapsulates the relation between the individual habitus, the forms of capital used, and the field as a result of which practice in that field is produced. According to this formulation, practice is produced when the individual disposition (habitus) meets her/his position in a field, using the available form of capital, within the current “state of play” (Maton, 2008) of that social arena (field). 3.4.1  Three Forms of Capital Bourdieu defines capital as “accumulated labor20 (in its materialized form or its ‘incorporated,’ embodied form) which, when appropriated on a private, i.e., exclusive, basis by agents or groups of agents, enables them to appropriate social energy in the form of reified or living labor” (Bourdieu, 1986). In a Bourdieusian sense capital implies “power, or the capacity to achieve certain ends via the activation of suitable dispositions in certain conducive contexts” (Jain, 2015). The three, non-‘economic’21 types of capital Bourdieu conceptualizes are symbolic, cultural and social. Symbolic capital implies an ‘autonomous mode of perception and appreciation’, according to Bourdieu, which operates according to its own logic separate but based, in the final analysis, on ‘modes of production’ and physical capital in the economy (Bourdieu, 1990). Symbolic capital is “to be understood as economic or political capital that is disavowed, misrecognized and thereby recognized, hence, legitimate, a ‘credit’ which, under certain conditions, and always in the long-run, guarantees ‘economic’ profits” (Bourdieu, 1980). The practices associated with it “can only work by pretending not to be doing what they are doing”. Reducing this practice to either ‘self-interest’ or ‘dis-interest’ would be a misreading 20  This notion is close to and builds on the notion of capital developed by Karl Marx (Swartz, 1997, p. 74). 21  Bourdieu uses inverted commas to mean economy as usually understood—the realm of material production and exchange. I use the same method in the book to distinguish between ‘economic’ (as only understood in the usual sense) and economic (as containing the avowed and disavowed, the social and the cultural forms in addition to ‘economic’) forms of capital.

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of it—given that it functions “by virtue of a constant, collective repression of narrowly ‘economic’ interest”. This form of capital to the holder exists in the form of “a capital of consecration”—the ability to consecrate an object. Bourdieu posits that in a society that refuses the objective truth of economic practices, that is, “the law of ‘naked self-interest’ and egoistic calculation”, even the ‘economic’ capital cannot act independent of some conversion that renders it efficient but through symbolic representation that is seen as legitimate (Bourdieu, 1990, p. 118). Symbolic capital helps disguise the material pursuit by making it seem disinterested and driven by a higher cause (Swartz, 1997, p. 43). Viewing social life as an arena for constant struggle for “rare goods” (Bourdieu, 1990, p. 141), Bourdieu points to the struggle to find legitimate ways of representing the distribution of capital in its many forms—representations that are laden with power relations and can either sustain or subvert capital’s distribution. Social capital, on the other hand, is defined by Bourdieu as “the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition” or, in other words, “to membership in a group” (Bourdieu, 1986). In this conceptualization social capital consists of “power potentials residing in group membership” (Bourdieu, 1984, 1986, 1998; Häkli and Minca, 2009), and it takes explicit account of relations, dispositions and the social context of the accumulation of social capital as a form of economic capital. What allows for a creative use of social capital in a Bourdieusian framework is that it functions as a thinking tool as against a substantive device for investigating the possibility of a desired outcome.22 Social capital is immaterial, mobilized and accumulated through an investment (not in the monetary sense of calculated intention for gain but through the logic of emotions), which is usually not consciously established with the aim of convertibility to ‘economic’ capital. Membership provides the person with a collectively owned capital or ‘credential’ which entitles her/him to credit, in the various senses of that term (governed by 22  In mainstream usages of the term it is reduced to an apolitical and benign substantive quality in explicit formal institutions summarized as ‘trust’ (for mainstream views on social capital see Coleman, 1990; Putnam, 1993; Fukuyama, 1995; Ostrom and Ahn, 2009; Ferragina, 2010; Svendsen and Svendsen, 2009; for early twentieth-century use of the term see Hanifan, 1916; for a critique of the mainstream view see Hyden, 1997; Deth, 2001; Harris, 2002; Schuurman, 2003; for a Marxist critique of Bourdieu’s use see Fine, 2001).

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the logic of knowledge and acknowledgement). Social capital may exist only in a practical state in material or symbolic exchanges that constantly renew and maintain them, or they are socially instituted through a common name (a family, clan, a school, a party, etc.). In the latter form, too, social capital is really enacted and “reinforced” through the exchanges that at any present moment are latent and possible through membership. A social network, according to Bourdieu, is not a natural given or a social given that is sustained only based on an initial act of institution, but is the product of “an endless effort at institution …an unceasing effort of sociability, a continuous series of exchanges in which recognition is endlessly affirmed and reaffirmed” (Bourdieu, 1986). It is a product of investment strategies, individual or collective, consciously, or unconsciously, aimed at reproducing social relationships that are usable in the short or long term. It is accumulated through transforming contingent relationships (neighbourhood, workplace, or even kinship) into the ones that are at once necessary and elective, that are felt subjectively (gratitude, friendship, respect, etc.) and are institutionally guaranteed (rights). The volume of social capital depends on the size of the network the agent can mobilize. It is the profits accruing from membership in a group that guarantee the group’s maintenance, the profits of belonging to a group that lead to a guarantee of the group’s perpetuation albeit not consciously designed towards that end. A person does not consciously become a member of a kinship group, for instance, with mathematical calculation of cost-benefits through the history of her/his membership. The other concept used by Bourdieu in his ‘general theory of the economy of practices’ is cultural capital, referring to accumulation through ‘self-improvement’ or ‘unconscious inculcation’ (embodied), objectified symbols (pictures, books, dictionaries, instruments, machines, etc.) or institutionalized legal guarantees of recognition (institutionalized). Each one is convertible to the other but has ‘economic’ capital at its roots, not entirely reducible to its ‘economic’ dimension, which Bourdieu criticizes as “economism” (Bourdieu, 1986). This form of capital is accumulated over time and exists in an embodied and incorporated capacity—it is the outcome of a labour of “inculcation and assimilation” which, by that fact, takes time to develop. Its incorporated quality distinguishes its mode of accumulation from ‘economic’ capital due to the reason that the task of accumulation cannot be delegated; the process of “self-improvement” must be undertaken personally. This form of capital mainly functions as an

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informational capacity that is in-built and incorporated through (but not limited to) a hereditary process. The different types of capital can be derived from or transferred into ‘economic’ capital, but with more or less effort at transformation to produce the type of power needed in a particular field. For example, certain goods and services can easily be accessed with ‘economic’ capital, while others can be accessed only through a social capital of relationships which cannot act instantaneously. They have been established for a long time without any declared ulterior purpose and beyond the period of their necessity. Other “disavowed” forms (symbolic forms) of capital have their roots in ‘economic’ capital, or they derive their currency from it. However, these other forms are never entirely reducible to the ‘economic’ definition and produce their specific effects to the extent that they conceal (not least to the possessor) their economic roots. As such, there is no wastage of resources and labour time in this theory of capital. A customary reinforcement of social capital not meant for anything but its own intrinsic purpose can turn out to be a reliable resource when mobilized. The convertibility of different types of capital is at the basis of the different strategies of reproducing capital (and one’s position in the social space), which happens with more or less cost, with more or less loss, or with more or less concealment.

3.5   Operationalizing the Framework; Constructing the ‘Mega-Structure’ This section develops the institutional analytical tools by examining the location where the dispositions of habitus are formed in the context, that is, the ‘mega-structure’ patriarchal family in Kabul. The word mega-­ structure conveys a ‘principal’ structure among a set of structures that temporally precede other structures and within which most of the early socialization takes shape and develops. The nature of the genesis of habitus, as stated by Bourdieu, entails a “chronologically series of structures in which a structure of a given rank-order specifies the structures of lower-­ rank order” (Bourdieu and Wacquant, 1992, p. 133). As we move backward from the present and reconstruct the series of structures that overlays new dispositions on individual habitus, we come across certain salient social structures that help in unpacking individual human practice in a given society (much like peeling an onion to get to the core). These

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structures also represent what Bourdieu calls ‘objectivities of the first order’, that is, “the distribution of the material resources and the means of appropriation of the socially scarce goods and value” (Wacquant, 1992). For reasons explained below, I locate the objectivity of the first order in Afghan society in the patriarchal top-down family structure, where I seek the micro-analytic tools to explain individual professional behaviour through that individual’s habitus. To locate micro-analytic tools in the family structure is, again, inspired by the sociological method of Bourdieu by which he meant an “art of thinking phenomenally different things as similar in their structure and functioning and of transferring that which has been established about a constructed object, say the religious field, to a whole series of new objects, the artistic or political field and so on” (Bourdieu and Wacquant, 1992). By adopting habitus and field as the two principal tools, my aim is to identify, through a review of literature and personal observation,23 the effect of active institutional elements (or AIEs) on manufacturing activities as derived from the ‘mega-structure’ family, a structure which holds roughly coherent prominence and is temporally prior in structuring individual habitus in Afghan society, prior to individuals coming into contact with the realities of the field of production itself. Elements of the field were the more concrete-level sector-specific structuring structures that structure and were dealt with by the investor habitus through constant encounter (the outcome of this is empirically observed in how the adaptive strategies to ensure enterprise continuation have developed). This procedure of arriving at the micro-analytics of institutions to explain the investment decision and subsequent dealings in the production field—in a crude sense and without accounting for feedback relationships—is illustrated by the following diagram (Fig. 3.4). 3.5.1  Family Structure The common ‘mega-structure’ family—extolled as the “highest seat of morality” by Durkheim (1984, p. xliv)—provides the environment 23  As explained in the note on positionality in the Methods chapter (Chap. 5), the overlap of my personal life observations and this research project can have a positive potential in the form of unsystematic tacit social knowledge rich in nuance and detail—which I give structure to and bring to effect in academic value through a fine-tuning process involving review of secondary sources.

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Investment Decision and Continuation

Fig. 3.4  Strategy for operationalizing conceptual framework

through which an early understanding of the environment is transmitted to an individual. ‘Life-in-family’ from birth to the stage where formal education begins involves introduction to language, which operates as the main transmission conduit for “socially constructed reality” (see Berger and Luckman, 1966), among others. Learning words, their content and semantics, and picking up the way language is used to convey meaning brings with itself the beginnings of social education—also determining educational aptitude in later years (Brandone et al., 2006)—establishing the relationship between the individual and the environment through a first-hand encounter that, as its necessary feature, entails awareness of objects, both material and ideational, and constitutes one important aspect of the formative childhood years. Early childhood age that begins from birth and continues until eight years of age is also “critical for cognitive, social, emotional and physical development” because the brain at this stage retains the greatest degree of responsiveness to and absorption

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capacity from experiential input, a capacity that decreases with age (UNICEF, 2012). Hence, during early childhood relatively undiluted structures transmitting dispositional attitudes and the general proclivity towards life opportunities can be found, and they are few, which makes them tractable. The further removed the individual’s life process from this initial point, the more likely it is that the set of field-based structuring structures that come into a dialectical relationship with habitus becomes diversified, making tracing all of such structures dependent on longitudinal case studies on each separate individual—something not intended in this research.24 Life-in-family can continue in some cultures into adolescent and adult life. In many developed societies the mega-structure is more complex than being dominated by one element, including the ‘family’ and educational input from non-family sources at an early stage of the process of habitus’ formation. This happens through ‘formal’ state or non-state systematized education and societal exposure. The former includes pre-school (a system originating in late eighteenth-century Western Europe), primary, secondary, and high school. The latter includes entertainment-educational media, child and adolescent TV programmes and entertainment, novels, music and so on, as well as life in the community and, most recently, social media—exposed to its effects if not being its active users in early childhood. Formal education can begin early on and in countries where the pre-school system is common, this educational input can begin soon after birth.25 On the other hand, the coincidence of the early childhood years and the onset of societal exposure can differ and depends on permissive or insulating factors that limit or allow a child’s exposure to such societal input, the most important being the control that parents and the family environment can exercise. Depending on the study context, for application of habitus as a framework, seeking the mega-structures that are—if not comprehensively—to a good degree in the lead during early childhood and are elemental to how 24  My exploration of the ‘mega-structure’ family merely serves to find out the relevant substances of habitus relative to the particular objective practice of manufacturing sector investment and enterprise continuation. 25  In France, Hungary and Israel, for instance, compulsory school begins at age three and before this children are sent to pre-school. In the majority of the Organisation for Economic Co-operation and Development member countries (a club of the 37 most developed economies in the world), pre-school begins early on and school age falls anywhere between three and six.

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early socialization is shaped would help the current inquiry as a window into explaining decisions in the professional domain. Provisionally, through a process of elimination, from a set number of structures one can arrive at a primary structure, including the broad categories (a) family, (b) formal-educational and (c) societal-educational (or informal). I should add that this is not a definitive list, nor does it include the complex details each category contains. The relative weight of any of the above can lead to a clear delineation of the scope of their development and range of influence in any society, also helping in identifying the effects of institutions germane to particular decisions of an individual, early on or later in life. In this study and for the purposes of operationalizing the framework to a workable degree, it is less likely that the ‘societal-educational’ factor could have produced a structuring effect on habitus more than the other two categories. This is partly due to the common practice in Afghanistan of providing an environment at an early age that is protected by an insulating barrier erected by family and kinship group due to a religio-­conservative puritan concern (or simply a cultural attitude) for proper upbringing, mixing and socializing often seen negatively as improper frivolity (kocha’gardi) even and particularly during adolescence. This is apart from the fact that factors exposing children to societal education of some of the aforementioned kinds (particularly related to entertainment) are often present as an ‘added bonus’ to material well-being in societies where economic development allows for their propagation (Afghanistan being, to the contrary, predominantly poor and rural). Although the ‘formal-educational’ category is more common due to government-run schools and traditional madrassas in villages in Afghanistan that are often free of charge, this element enters an individual’s life fairly late and after a great deal of formative years spent in the family environment. Average schooling age in Afghanistan is seven, and even after entering school, the short time spent in learning involves a few hours of consecutive teaching per day under strict discipline. Pre-school system is uncommon. Very few private kindergartens opened in the post-2001 period in Kabul, and often with a high fee which limits their accessibility to those who can afford them. The mega-structure ‘family’ (the group of people brought together by consanguinity or affinity) could function as the most apposite category to gain a relatively accurate depiction of the process of an investor’s habitus formation in Kabul. I should add that an investigation of all aspects of the family unit in Afghanistan was secondary to the research concern. As Parsons and Bales have rightly suggested (1955, p.  35), “we must not

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forget that the nuclear family is never [emphasis in original], … an independent society, but a small and highly differentiated subsystem of a society”. An adequate understanding of the family unit would have required some effort at reconstructing the objective structures in the context to a good degree that would represent “Afghan society” as a whole—which fell outside the scope of the present research. A word of caution might be needed. By the application of a typology of the Afghan family structure in the book it is not wished here to reinforce the generalizing tropes regarding Afghan society, in a fashion that is aligned with pre-given concepts that are problematic from a methodological standpoint—as is repeatedly emphasized in the book. It is meant, rather, to merely describe the positive (real and empirically researchable) properties of this structure in relation to resource allocation. Most importantly, this typology is meant to bring nuance to the RCT (or bounded rationality) version of individual economic motivation that underpinned the EEA. As such, it should be taken as a provisional and historically contingent instrument in method that reflects relatively recent objective reality in a retroductive research strategy, without presuming an essentialized “Afghan family structure” that is uniform and permanent (a timeless social unit associated with a supposedly unchangeable ‘primitiveness’). A researcher might have to seek other sources of the formation of habitus in another historical period in Afghanistan (or elsewhere) depending on what patterns in inductive data at the time reflect—habitus being always in flux and never permanently determined. 3.5.2  Quranic Injunctions Owing to the prohibitive codes of propriety in Afghan society as an obstacle to longitudinal anthropological research, particularly when it comes to being in regular proximity with women26 inside the house, the ‘Afghan family’ largely remains a little-known area. Much has been said in generic terms about the Afghan society, but accounts are lacking that describe in detail the dynamics inside this form of family where individual habitus and thus an embodied understanding of norms, beliefs, conventions and rules are transmitted. I remedied this lacuna by considering the mutually 26  In one very recent anthropological study by Andrea Chiovenda (2015) in the eastern city of Jalalabad, the researcher has had to concentrate entirely on male participants because of the strictly enforced tradition of female segregation (parda).

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constitutive effects of another structure on the family structure itself, namely, Quranic injunctions as the written form of the main religious belief, Islam, in Afghanistan. The constitutive effect of Quranic injunctions and family is mutual because, despite the former’s effect on Afghan social code in general, it is not a cohesive unitary norm, nor a unitary belief system in objective form. Islam as preached through textual and hierarchical authority and as practised in action is usually refracted through myriad societal particularities which lead to myriad forms of syncretism. Particularly in its first three centuries of emerging as a religious and political ideology in the Arabian Peninsula, Islam had to thread a “diverse cultural geography” in Late Antiquity, differentiated based on regional centres in Arabia, the Islamic east (greater Iran), Syria, Egypt and the Iberian Peninsula and North Africa (Robinson, 2010; Daftary, 2010), and encountered progress that pre-Islamic civilizations, notably the Sassanian and Byzantine empires, had already built and set in motion. Islamic legal doctrine presently knows many “schools” (madhabs) that bear important distinctions in how minor details as well as larger principles pertaining to rights and obligations are administered (for details, see Hallaq, 2005). The important distinction between the broad Sunni and Shi’a categories are, for instance, based on such significant issues as the purpose of creation and the nature and scope of political authority, which has given rise to concomitant political implications in the modern world (Nasr, 2007). The complexity of Islamic ideology is compounded by the frequent encounter of early Islamic theology with philosophical traditions from its neighbouring civilizations, giving rise to further forms of syncretism and mystical traditions (Fakhry, 2000), later having to also come to terms with modernity, which has led to present adaptations, with divergent outcomes (Soroush, 2009). An absolutistic Islamic ideology approximating the structuring of the family environment might seem logically plausible by a considerable stretch of the imagination but is objectively unavailable. Neither would the opposite seem true—the family absolutely structuring religious practice. A mutual structuring effect between them therefore seems the more suitable analytical ground while granting Quranic injunctions relative priority given their overwhelming normative supremacy. It should be added that Quranic injunctions are not relied on directly as analytic tools. The teachings are used to only construct the environment of family structure, which is the objective concrete medium that shapes investor habitus. Islam as a belief system is transformed into a socially significant reality through

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the family structure as a more coherent social sub-system that refracts the textual precepts of this religion (see Marsden and Retsikas, 2013). Hence, Quranic injunctions are helpful to the extent that they further this methodological purpose. A small minority among those adhering to Islam might learn the textual precepts without any intermedial institution, having attained the authority to do so in the absence of mediation by a ‘gatekeeper’, that is, an ecclesiastical authority who relays the ‘right interpretation’ (a mullah, mufti, marja-i taqleed, mof’faser, etc.). The majority have a cultural understanding of the religion and many, in fact, might explicitly espouse non(ir-) religious views and practices yet grow up within social structures that have developed through an interaction with religion’s influence. Hence, considering the family as the mega-structure appears more appropriate given it represents the objective domain where habitus’ development can be traced among the religiously non-specialist majority (the specialist further honing its societal effect in a learning process). The picture from this exercise is admittedly incomplete, and has been partially supplemented with literature on Afghan society, and with my own observations as a member of this society. The analysis, therefore, has been retroactively constructed with the aid of the limited amount of secondary data on Afghan family and my personal observations, and most importantly through extrapolating from religious injunctions, an ideal type of ‘family structure’ in Afghanistan—granted with many gaps to be filled requiring more research. I narrow down the focus here to those institutional aspects of habitus embedded in the Afghan family structure that have had a bearing (as will be explained in the empirical section) on the investment decision, the subsequent continuation of the investment, a perception of the field of production, and the adaptive strategies that have developed within production units to ensure continuation of the production unit. To begin, certain generic inscriptions can be ascribed to the category ‘Afghan family structure’ in a socio-cultural environment that is predominantly “patrilineal, patrilocal, and strongly androcentric” (Chiovenda, 2015).27 The family is arranged along a hierarchy that begins on top often with a male member which I call the ‘authority figure’ given his final say 27  Although the research by Chiovenda (2015) focuses on Jalalabad city, I maintain these properties are suggestive of a wider pattern in Afghan society, albeit varying according to the city and most often the ethnicity in how intensely these properties can manifest.

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on domestic decision-making, and descends in the order of importance with mother and elder son a level below, and the remaining members according to age and gender, further extending to immediate relatives (uncles, aunts, first cousins), non-blood relatives (through marital bond) and the kinship group. This hierarchy is determined by gender (male over female) and age (an elder uncle having more say than a son) and provides the preliminary terrain of habitus’ formation regarding power within and without the family. Those not fitting within this structure are treated as transitive; the relationship is not as permanent/stable as the relationships of consanguinity. Each household in this community forms an autonomous unit with an authority figure in control of all affairs, an environment where “a man’s prestige—that is, his honour—depends on his ability to manage and defend human and material resources” (Tapper, 1991). Descent is defined by a strictly patrilineal structure; the transmission of property and status is through a male member, none happening through women except perhaps the claim on their father’s estate that can be attributed to their trousseau on their first marriage. Men control the behaviour of the household women, whose interests, when diverging from the family interest, often remain hidden from public view and rarely, if ever, give cause for intransigence. Family and kindship are thus vital for managing the livelihood strategy, including in such areas as cross-border trade where family ties buttress commercial links (Marsden, 2016). Although the intensity of authority by a male member (often the father or the eldest son) in different domains might have witnessed change during the twentieth century as a result of various attempts at top-down state-led transformation of rights, particularly women’s, and owing to the dislocations caused by the effects of decades of war and the post-2001 relative stability (Kandiyoti, 2005), as well as the effects of migration on gender identity (Oszweska, 2015), the hierarchy in charge of livelihood applied in the book nevertheless reflects a sufficiently common extant reality to make it useful. In particular, the ‘economic’ task involving outside work is generally associated with male members within this structure. As Julie Billaud documents (2015), some Afghan families even make up a male member to work outside if they do not have one by dressing a daughter like a boy and by assigning her a new gender identity in society—which is kept strictly confidential not to spoil the stratagem. Women might get to work especially during a certain period of their lives in bigger cities like Kabul but

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most often fall back on the traditional role of managing the domestic affairs of the family after marriage, particularly with the birth of their first child. Such a division of labour, apart from its ‘economic’ structural underpinnings,28 is closely aligned with religious precepts, as will be enumerated below. In the context of an Afghan family, the individual comes into contact with the structuring effects of Quranic injunctions as Islam’s most sacred text, the knowledge of it transmitted often through non-specialist, tacit or, sometimes, explicit means as a social knowledge (Berger and Luckman, 1966) or ways of doing things from one generation to the next. This forms the basis for an elaborate and structurally pre-eminent social ethos where, even though it orientates individual behaviour, including in the productive domain, members of society do not resort to its textual form for legitimation in every instance. It retains the efficacy of a ‘pre-reflective’ social structure within which the ‘common sense’ of society resides and interpretation of social reality is made possible: where habitus is produced. These injunctions are often built into implicit institutions. Some Quranic injunctions underlie explicit institutions (e.g. usury), which, evolving through many generations of practice, seem to have led to an implicitly transferred institution (non-interest-based credit). The injunctions regarding the family hierarchy are particularly determinant, beginning with the inviolability of the parents’ commanding position. In the Quran believers are ordered to: “…revere God whom you ask about, and the parents” (Quran, 4:1). A further insistence is given in the following verse: … and be good to the parents, and the relatives, and the orphans, and the poor, and the neighbour next door, and the distant neighbour, and the close associate, and the traveller, and your servants. God does not love the arrogant show-off. (Quran, 4:36)

The notion of respect towards and “being good” (ehsaan) to parents is repeated in seven places in the Quran. In them it is ordered that children should respect, act deferential towards, pray for and not cause grief for 28  For instance, the wife might still be able to continue a post-birth professional life if, at minimum: (1) the state policy and regulations actively encourage it by post-birth paternity leave, (2) there is guaranteed maternity leave and retransition to professional life, (3) there are enough pre-schools widely accessible by most citizens, and (4) if pre-schools are affordable.

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their parents. The duties of mother and father, however, are not the same towards their child, delimiting their areas of responsibility as inside and outside the oikos (household) respectively: Mothers may nurse their infants for two whole years, for those who desire to complete the nursing-period. It is the duty of the father to provide for them and clothe them in a proper manner… (Quran, 2:233)

This gender-based hierarchy of power is brought into relief in the Quranic chapter dedicated to the topic of “women” (Al-Nisa) addressed to a male interlocuter, about his obligations towards women and vice versa. The law of inheritance in this chapter illuminates more clearly the ‘economic’ place of man and woman in Islam29: …The male receives the equivalent of the share of two females. If they are daughters, more than two, they get two-thirds of what he leaves. If there is only one, she gets one-half. As for the parents, each gets one-sixth of what he leaves if he had children. If he had no children, and his parents inherit from him, his mother gets one-third. If he has siblings, his mother gets one-­ sixth. After fulfilling any bequest and paying off debts. Your parents and your children—you do not know which are closer to you in welfare. This is God’s Law… (Quran, 4:11)

The subsequent discourse in the chapter then delineates other aspects of social structure relevant to individual habitus, culminating in the following important pronouncement: Men are the protectors and maintainers of women, as God has given some of them an advantage over others, and because they spend out of their wealth. The good women are obedient, guarding what God would have them guard. As for those from whom you fear disloyalty, admonish them, and abandon them in their beds, then strike them. But if they obey you, seek no way against them. (Quran, 4:34)

This ideal of being the “protector”, as the report by Chiovenda (2015) also suggests (albeit regarding the code of masculinity in general), 29  Numerous exegeses called Tafsir exist dealing with the issues of linguistics, jurisprudence and theology in the Quran. Here, due to scope and the issues of utility, I will not enter into the exegetical details of the above injunctions.

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contributes to a psychological environment that requires “display of fearlessness, courage, aggressiveness and self-assertiveness”, features that structure individual habitus in important ways. As for other social relations, duty towards relatives is mentioned in close succession to parents: God commands justice, and goodness, and generosity towards relatives. And He forbids immorality, and injustice, and oppression. He advises you, so that you may take heed. (Quran, 16:90)

In particular, the virtue of being charitable with one’s wealth in God’s way is exalted, a behaviour encouraged towards relatives in other verses (e.g. verses 177, 180 and 215 in Al-Baqarah), followed by an obligation to orphans and the poor: If the [inheritance] distribution is attended by the relatives, and the orphans, and the needy, give them something out of it, and speak to them kindly. (Quran, 4:8)

These injunctions highlight a structural imprint upon the character of social relationship in investor habitus that, by encouraging benevolence towards the community (through reference to relatives, the poor, the needy, travellers and neighbours), might explain the communitarian ethos that a believer is ordered to follow while chastising the immorality of acting extravagantly30 and as an arrogant “show-off” (Quran, 4:36). It also determines the currency by which ‘symbolic’ capital is evaluated, that is, the recognition of the material dimension of wealth by misrecognizing, concealing and disavowing it in symbolic form. It would follow from the above that the ‘individual’ her/himself is seen as part of the community and not distinguished from it, a notion that is important in how habitus takes shape as either individualistic or driven towards and appealing to the collective for approbation and measures of self-appreciation. This tendency calls on the social system of norms and representations whereby appreciation in general is given a set of common evaluative parameters among members of the society, including regarding professional positions. The cultural and symbolic capital attached to a profession is distributed through this evaluative system. 30  “The extravagant are brethren of the devils, and the devil is ever ungrateful to his Lord” (Quran, 17:27).

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To return to Quranic injunctions, the above immediate commitments regarding parents, relatives, orphans and the destitute expands into the notion of “homeland” (watan) in an oft-repeated, yet disputed for its authenticity, Hadith (Prophet Mohammad’s saying): love for one’s homeland is part of faith (hub’ul wattan min’al iman). This further expands habitus’ normative range. And although the notion of “society” is rarely mentioned in the Quran, the word “people” (al-naas) is more common, but its use is mostly rhetorical.31 Regarding social divisions along “group” (taayefa), “race” (sho’oob) and “tribes” (qabayel), the Quran states: …We created you from a male and a female, and made you races and tribes, that you may know one another. The best among you in the sight of God is the most righteous. (Quran, 49:13)

The implication from the above is that “righteous” is the common denominator for being “best” in the eyes of God, a quality that is meant to suppress the urge for open expressions of an individual’s group-based loyalties for it would contradict the above precept. Other habitus-relevant norms related to the economic life of an individual stressed in the Quran are the importance of keeping the sanctity of agreements,32 being honest33 and acting just.34 Injunctions related to outside-the-family ‘economic’ relations35 are numerous, including on private property: “And do not consume one another’s wealth by unjust means, nor offer it as bribes to the officials in order to consume part of other people’s wealth illicitly, …” (Quran, 2:188) or “… do not consume each other’s wealth illicitly, but trade by mutual consent...” (Quran 4:29). The more widely common case of forbiddance of usury is mentioned in six different places in the Quran, most vehemently in verse 275 in Al-Baqarah: “Those who swallow usury will not rise, except as someone driven mad by Satan’s touch” (Quran, 2:275). Or, in the following verse: “O Believers: devour not Riba [usury], 31  Commonly used at the beginning of verses to attract attention, mostly as “O you believers!” (yaa ai- yuhal’naas). 32  “Those of them with whom you made a treaty, but they violate their agreement every time. They are not righteous” (Quran, 8:56). 33  “And do not mix truth with falsehood, and do not conceal the truth while you know” (Quran, 2:42). 34  “O you who believe! Stand firmly for justice…” (Quran, 4:135). 35  For a detailed discussion of Islam and its compatibility with a capitalist mode of production see Rodinson (2007 [1966]).

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doubled and redoubled; and fear Allah, in the hope that you may get prosperity” (Quran, 3:130). These two closely approximate and produce explicit institutional effect. The institutionalized form of Quranic injunctions is undergirded by frequent verses such as the following that determines the place of the “subject” (abd, a term used for slave but also denoting all humans before God) in her/his earthly universe: You do not get into any situation, nor do you recite any Quran, nor do you do anything, but We are watching over you as you undertake it. Not even the weight of a small particle, on earth or in the sky, escapes your Lord, nor is there anything smaller or larger, but is in a clear record. (Quran, 10:61)

God being the source of everything on earth as the omniscient creator is enshrined in ‘His’ 99 names or attributes, the two commonly known ones rahman (merciful) and rahim (gracious or kind) given they are repeated in Bismallah (in the name of God, the gracious, the merciful) but also the attribute razzaq (provider or sustainer): [If] they argue with you [Mohammad] before your Lord, say, ‘All grace is in God’s hand; He gives it to whomever He wills.’ God is bounteous and Knowing. (Quran, 3:73).

A common-sense belief in the above principle forms the constitutive basis of individual habitus in an important way (this will be discussed with empirical evidence in Chap. 8, Sect. 8.1.), which would render the belief in and display of oneself as the source of ‘economic’ provision as akin to a sacrilege, an act disregarding God’s will, or an arrogant disregard of God’s favour in raising one’s material fortune, also leading to the belief that such denial might, apart from its inherent ‘immorality’ as an intransigence, threaten one’s material gain by increasing the likelihood of God’s disfavour as a retribution. Especially as the unknowability of what lies in future places the act of living contingent on God’s eternal will as the only legitimate perspective on life and the permissible worldview for a believer, such knowledge falling under the purview of the omniscient divine power: Say [Mohammad], ‘Nothing will happen to us except what God has ordained for us; He is our Protector.’ In God let the faithful put their trust. (Quran, 9:51)

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Or, in the following verse from Al-Anfal: …Had you planned for this meeting, you would have disagreed on the timing, but God was to carry out a predetermined matter, so that those who perish would perish by clear evidence, and those who survive would survive by clear evidence. (Quran, 8:42)

Hence, any such attempt to ‘predict’ the future would contravene the belief in God as one omniscient authority who holds the accidental and eternal knowledge. This is perhaps the reason why one commonly practised act of prediction at the time when Prophet Mohammad lived, sorcery, has been strongly castigated and forbidden in the Quran: “And [say I take refuge with the Lord of Daybreak] from the evil of those who practice sorcery” (Quran, 113:4). In the face of such an uncertain yet unknowable future, ‘chance-taking’, particularly with one’s wealth (such as gambling), is also strongly chastised: They ask you about wine and gambling. Say: ‘In them both lies grave sin, though some benefit, to mankind. But their sin is graver than their benefit’. (Quran, 2:219)

The Quran is clear about the forbiddance of subjugating one’s conviction to anything but the ultimate purpose of worshiping God and seeking the ‘other world’, including passions and desires (nafs) and a pursuit of wealth for wealth’s sake. It has nonetheless called wealth that is pursued through measures that do not contravene the ‘ultimate purpose’ as “munificence of Allah” (Quran, 62:10) (see Shafi, 1979, for a distinction between wealth for its own sake and wealth intended for the ‘ultimate purpose’). Wasting wealth is, in fact, forbidden in verse 141 of Al-Ena’am, “…and do not waste. He [God] does not love the wasteful”. And wealth is appraised as one instrument of attaining the ‘ultimate purpose’ itself: And the parable of those who spend their wealth seeking God’s approval, and to strengthen their souls, is that of a garden on a hillside. If heavy rain falls on it, its produce is doubled; and if no heavy rain falls, then dew is enough. God is seeing everything you do. (Quran, 2:265)

This verse, apart from others on the same topic (wealth in general is mentioned 53 times in the Quran), is emblematic of the instrumentality of

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wealth as an object in the service of attaining God’s approval as the ‘ultimate purpose’ in life. Concerning the human ‘will’, there is a long theological debate in Islamic history along two main poles (Fakhry, 2000; hallaq, 2005; Robinson, 2010): If one concedes free will and the ability of humans to create their actions, God being the creator of all would be questioned. And if humans are thought to merely follow God’s eternal will, this brings into question the fairness of final judgement for acts humans had no part in creating. A specialist would be better placed to comment on these two strands of thought, and entering into the intricacies of this debate is not advisable here due to reasons of scope. Neither do I consider such specialist scholastic debates very illuminating insofar as the ‘social knowledge’ transmitted through the family to structure individual habitus is concerned—even less so the AIEs relevant to my purpose. To the extent relevant to this research, what lies in the immediate manipulable zone an individual might reign in, beyond this zone the mere struggle to predict, control and manipulate might simply be perceived as obstinance or the inability to read the cues of God’s eternal “will” (qaz’zaa in Islamic theology or sarnewesht in colloquial Kabul Persian)—for God has ordained what should and should not attain success. I should reiterate that these commandments illuminate the general inscription of the normative structure in social space, where the dispositions of habitus are deposited first through the mega-structure family. The family structure itself, as argued, is influenced by religion’s insistence regarding the sanctity of the parental role as one primary principle that should be treated as non-violable by family members—which comes to bear on how the hierarchy of power in the family is learned as part of the development of habitus along a patriarchal structure which has as its characteristic an arrangement along a top-down hierarchy governed by a male member (Siraj, 2010). Building on the preceding information, a schematic picture of the family structure can be drawn as a top-down patriarchal form embodied by the male authority figure to whom obeisance is paid directly regarding routine or larger questions in life through unidirectional commandments, or who inspires obeisance through emotional, charismatic or propriety-­ based influence, as a general norm and even when the order is not stated directly. In this structure, governance of routine or larger questions in the family sometimes involves consultative input by other members without affecting the top-down hierarchy of decision-making centred on the

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authority figure. Members of the family play complementary roles, supplementing and helping further the course devised by the authority figure. Social norms, such as respecting parents, an ethos that also extends to ‘elders’ (reesh-safidhaa) in general, and religious dictums demanding the same, facilitate the hierarchy sustained inside a family unit. These are literally embodied in the form of not raising one’s voice when talking to the authority figure (to parents in general), not sitting above them in the house (the entrance to the room usually seen as the place for the lower ranks in the family if the room is rectangular), not overtaking them while walking, not stretching one’s legs in front of them or towards them, and many other such mannerisms. Disagreement, refusal or protest as individual acts by family members in such a hierarchy can become the cause for being cast as a pariah, leading to gradual ostracism in case the ‘intransigence’ is repeated. Protest often does not lead to compromise, given that compromise might result in eroding and perhaps threatening the inviolability of the position of the authority figure and would, in effect, bring one to share this role with him. The acceptable ‘transferring process’ of the decision-making role, however, happens through its own gradual mechanism and is not detached from the logic of emotions. It happens through the hierarchy by the function of natural or accidental death of the authority figure, or through a gradual process by which the authority figure grows old and confers ‘economic’ and decision-making power regarding livelihood strategies to another member. Or the ‘other’ member becomes important by virtue of his/her growing financial position as an outcome of personal exertion (e.g. paying more towards the household finances), the prestige this transfer brings to the member inside the family raising her/him (usually a male) as the potential authority figure. If it does not raise her/him directly to the top, this at least makes her/him someone dealing with practical routine when the authority figure gradually disengages and comes into the picture when larger matters (say, deciding on a family member’s marriage) are being negotiated inside the family. The mode of relationship and the social system of appreciation regarding the outside world, including ‘economic’ profession, social position, education, marriage, the reciprocal non-­ pecuniary norms with relatives and social relations, the country as well as the treatment of non-family outsiders, is mediated through the normative institutions of the top-down family hierarchy.

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3.6   Active Institutional Elements (AIEs) Given the multiplicity of explicit and implicit institutions, not all were relevant to the task of analysing the research topic at hand. Consequently, building on the schema of the mega-structure in the previous section, I derive active institutions that operate as the elements of social practice in the four following domains. Box ‘A’ explores the decision-making process for entry into the secondary sector, explaining why this is chosen and not another professional option. Extrapolating from the mega-structure schema, in regard to ‘A’ the following AIEs were identified: (1) obeisance: functioning as non-­ inquisitive compliant disposition within the top-down family hierarchy; (2) emulation: functioning in the form of replicating the professional history of the authority figure, through a close interaction with which the early childhood upbringing takes shape; and (3) perpetuation: functioning similar to emulation but having to do with a symbolic legitimation of the act of emulation by tying it to the family history—even when the authority figure is no longer living.36 In relation to the role played by relatives, friends and acquaintances, the following AIEs were applied to explain the entry into the secondary sector: (1) trust: non-questioning belief in someone’s authenticity based on keeping sanctity of agreements, honesty and fairness as Islamic attributes and (2) non-pecuniary, non-committal and non-reciprocal social relationship (NNN): institutionalized practice for knowledge and credit transmission that relies on non-monetary social capital, the person receiving the information not obligated by social or formal institutions to abide by it, and reciprocity being optional and non-­ obligatory. The subjective active norm is related to the entity “people” (mardom) and “homeland” (watan) related to box ‘A’, communitarian norm: a notion of altruism based on ‘love thy relative, thy neighbour, the poor and the traveller’, including commitment to an abstract notion of unitary ‘homeland’ (watan)—a norm that should be seen in the context of the ‘homeland’ being war-torn and in need of stronger commitment than normal. In regard to B in Fig. 3.5, I identified the following AIEs: (1) trust; (2) communitarian norm; (3) fatalism: a belief in God giveth, God taketh away and the unknowability of future events, also manifested in ad hoc, 36  This idea of symbolic self-perpetuation approaches and is influenced by the thesis put forward by Ernest Becker in his book The Denial of Death (1973).

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A. Habitus

and

the

Investment

Decision

B. Elements of Field; machine, sales,

B’. Elements of Field; susceptibility

status preservation

security, EEA

C. Strategies for Enterprise Continuation

Fig. 3.5  Four study domains in a manufacturing unit

undifferentiated and non-technical management in a tendency to submit to a “leap of faith” disposition based on divine goodwill37; and (4) social esteem: a society-wide system of positional appreciation based on professional division of labour and the cultural capital attached to each. Regarding B′, the following AIEs were observed: (1) obeisance, (2) NNN, (3) communitarian norm and (4) the ‘unlawfulness’ (haraam) of usury in Islam. Here, the focus is mainly on the two determinants of the political economy of the context as elements of the field of production, namely EEA and militant insurgency (see Chap. 1 for elaboration). Hence the role of implicit institutions, although not absent, was less relevant in this section. This aspect of the field was beyond the zone of control of the investors and their habitus’ direct structuring effect and, therefore, the enactment of AIEs was not the main explanatory element. The AIEs for C in Fig. 3.5 include: (1) trust, (2) NNN, (3) obeisance and (4) prudential production: functioning as urgency and a short-termist norm of behaviour (war-time exacerbating it) to, among others, guard against wealth’s waste. I relied on the above AIEs for analysing the patterns in empirical data, using them as the micro-analytic tools that explain institutionalized behaviour in the context that were determinants of entering into the manufacturing sector and the strategies for enterprise continuation. I will not refer 37  Underpinned, inter alia, by verse 284 from Al-Baqarah, “to God belongs everything in the heavens and the earth…” (Quran, 2:284) and verse 109 in Ali’Imran, “to God belongs everything in the heavens and everything on earth, and to God all events are referred” (Quran, 3:109).

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back to the mega-structure family in every instance because of brevity and on the basis of the above exposition, treating the AIEs as the objectively relevant elements of the mega-structure in the field of production. From here on, the research will also build towards the book’s argument, that is, the sector not showing structural signs of having grown significantly important within the economic ‘anatomy’, functioning as a mechanism of reproducing the hierarchy of power in a patriarchal family within the field of production. The above general scheme applies, I maintain, regardless of the variations along ethnic lines in Afghanistan (see Barfield, 2010, for generic details). Such differential variations do not reduce the validity of the above schema considering that almost all Afghans officially adhere to Islam. I also did not observe strong relevance of group-based differences in the data as far as answering the RQs was concerned. This may partly be due to objective necessity that reduced maintaining group-based loyalties in manufacturing (which I did not broach due to its sensitivity), but it might also be an outcome of the aforementioned Quranic injunction regarding disavowing tribal and group-based loyalties, leading to the tendency to dismiss such types of discrimination in Kabul’s society as not in keeping with Islamic norms—albeit mostly in public and when among a multi-ethnic crowd. I approached the regulating effects of the above AIEs—unless in explicit form—as embodied practices structured by investors’ habitus. To reiterate a previous point, operationalizing the term habitus is an ex-post process to apply it in the analysis—the term itself, as stated by Grenfell (2008), while acting as the macro-analytic framework, does not contain micro-analytic pre-determined substance to treat the data with. The empirical contents of habitus’ effect on manufacturing as structured by AIEs is revealed through the regularities in the data. A final point on Fig. 3.5: the figure depicts a diachronic sequence for the book and describes my approach in reading the data. As such, it should be kept in mind to understand the expositional sequence of the book: A happening before ‘B/B″, and ‘B/B″ happening before ‘C’. This holds truer in the relationship of ‘A’ to the rest given that it is a one-time initial event. However, the relationship between B/B′ and C is relatively more complex. The inter-relation between them shifts and is a matter of the range of options habitus offers. To illustrate, a component of ‘C’ (e.g. regular client relationship) can conversely affect a component of ‘B/B″ (e.g. sales on credit/ograyi). For example, the loss of a link to a large pool of regular clients might lead the investor to reassess whether (s)he should

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continue relying on sales on credit/ograyi (see Chap. 7, Sect. 7.1.2, for elaboration on these terms). In line with ‘C’ following B/B’ would be when the governance structure in a unit witnesses a change towards a more complex form of division of labour if, through a new material or non-material resource made available to the individual (contained in ‘B/B″), (s)he becomes capable of re-evaluating a previous governance structure. In any case, the sequence runs from ‘B/B″ to ‘C’ because the former constitutes the objective field that structures the limits of action and lies mostly outside the conscious control of the investor, and whatever (s)he did in ‘C’ lies under her/his control. Hence, the adaptive strategies under ‘C’ were more responsive and malleable than the components of ‘B/B″, which mostly lie outside the control of the investor—they were out there in the context as a reality that pertains to the nature of the investment and the context’s political economy at large and were mostly not amenable for change by a single person, albeit ‘endogenous’ aspects of the field (discussed in Chap. 7, Sect. 7.1.) were comparatively closer to conscious control than ‘exogenous’ aspects (discussed in Chap. 7, Sect. 7.2.). To summarize the diagram (after accounting for the complexity of the relationship between ‘B/B″ and ‘C’), the linear progression from ‘A’ to ‘B/B″ to ‘C’ can show the correlational sequence I followed in mapping out an objective sequence of events. In the sense that for ‘C’ to happen, ‘B/B″ needs to be in place and for ‘B/B″ to happen, ‘A’ needs to have occurred. Whereas ‘A’ can occur without ‘B/B″ and ‘C’, and ‘B/B″ can occur without ‘C’. In a subsequent analytic step, the book uses the qualitative proxies of significance to assess the structural indicators in the economy suggesting the growth in size of manufacturing activities in Kabul during the study period (see Chap. 1, Sect. 1.3., for details).

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CHAPTER 4

Enabling Environment Approach (EEA) and Aid Expenditure in Post-2001 Afghanistan

The initial steps for orientating state institutions in Afghanistan in line with EEA were taken in December 2001 in Bonn, Germany, at a conference organized by the United Nations to negotiate a post-Taliban regime transition. The Agreement on Provisional Arrangements in Afghanistan Pending the Re-Establishment of Permanent Government Institutions (Agreement hereafter), signed at the now widely known Bonn Conference on Afghanistan, called for the establishment of an ‘Interim Administration’ to retain the powers vested in a sovereign following an official transfer of power.1 The composition, functions and governing procedures of the Interim Administration were laid out in the Agreement. The process of institutional change set forth thereafter led to the approval of a new Constitution by a traditional assembly called Loya Jigra in January 2004 (see Hanifi, 2012 for a discussion on Loya Jirga). Commitment to a “market economy” was enshrined in Article 10 of the new Constitution. EEA in Afghanistan during the post-2001 period (until the regaining of power by the Taliban in August 2021) tended to exclude the state in the coordination of (or participation in) economic resource allocation in 1  Transfer of power was needed because Afghanistan still had a UN-recognized de jure president during the Taliban regime—Burhanuddin Rabbani—who also presided over the country between November–December 2001 following the onset of the military campaign that removed the Taliban regime from Kabul. Only Pakistan, UAE and Saudi Arabia officially recognized the Taliban as Afghanistan’s legitimate government during 1996–2001.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 K. Rafi, Patriarchal Hierarchy, https://doi.org/10.1007/978-3-030-98407-6_4

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the sense of cancelling the possibility of the emergence of “extractive state institutions” (Acemoglu and Robinson, 2012). According to a report by the Special Inspector General for Afghanistan’s Reconstruction (SIGAR)2 that assesses the policy of private sector promotion in Afghanistan up until 2018, “US officials viewed private sector development as foundational to economic growth [in post-2001 Afghanistan], which in turn was seen as a key driver of security”. The intended security objective was to be achieved through providing employment to the young and the unemployed, raising the legitimacy of the Afghan state, and generating revenue for the state to reduce its dependence on the “international donor community”. The document adds that important policies were formulated at this stage in concert with the IMF and the World Bank, covering “critical priorities of macroeconomic stability, institutional infrastructure development, monetary policy creation, banking system rehabilitation, currency conversion, government revenue collection, and basic economic governance”. The US government also pushed for “the promotion of [private sector] investment, the privatization of the former state- owned enterprises (SOE), trade liberalization, lowering barriers to trade, integration with regional and world markets, and accession to World Trade Organization …”, while USAID focused on agriculture as the “cornerstone of recovery and a pillar of reconstruction for a sustainable future [in Afghanistan]” (SIGAR, 2018). Notably, the Afghanistan National Development Framework (NDF) of April 2002 set the direction of economic policy barely four months into the UN-recognized government of the Afghanistan Interim Administration. The document was prepared by the Afghan Authority for the Coordination of Assistance, a body established by the Interim Administration to work with IFIs, the UN, bilateral development agencies and NGOs. The role played by the country’s new Ministry of Finance (led by a former World Bank policy expert) was important in preparing the NDF, which stated that “the market and the private sector is a more effective instrument of delivering sustained growth than the state” (Afghanistan Authority for the Coordination of Assistance, 2002). The same ministry had an important role in producing the subsequent Securing Afghanistan’s Future (SAF). The policy paper was prepared by a steering committee co-chaired by three government ministries (finance, reconstruction and foreign affairs), partnering with the World Bank, IMF, UNAMA, Asian Development Bank and United Nations Development Programme, and working groups 2  US Congress bi-partisan congressional body set up in 2008 to monitor aid expenditure and development projects in Afghanistan.

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were mostly led by World Bank experts. SAF was presented by the World Bank to donors in March 2004 (Del Castillo, 2008, pp.  170–171) and showed heavy reliance on a private sector allocative regime. It emphasized the principle of “small government” that should function as regulator of the private sector and not as its competitor—arguably one extreme form of market-oriented approach to economic development, as argued by Chang (2002)3—stressing the commitment to create the “enabling environment for both the domestic private sector …, and the international private sector”. The document added that “the private sector cannot risk its hard-earned money without security, rule of law [emphasis mine] and a government committed to transparency and accountability” (Government of Afghanistan, 2004). The 2006 Interim Afghanistan National Development Strategy, also approved as Afghanistan’s Poverty Reduction Strategy Paper (PRSP) by the boards of the World Bank and IMF, reaffirmed the Afghanistan government’s commitment to pursuing a “lean government” model, declaring that “government will act as a policy maker, regulator, and enabler of the private sector, not its competitor”, further adding that “our economic vision is to build a liberal market economy … to do this, we will develop an enabling environment for the private sector to generate legitimate profits and pay reasonable taxes, thereby enhancing public revenues that can then be invested in public services” (IMF, 2006a). According to a report by the Afghanistan Investment Support Agency4 (2012), to accomplish the objective of a private sector-led allocative regime, seven state-owned banks (including the Export Promotion Bank) and public enterprises were restructured to be privatized. Three state-­ owned banks, namely, the Agricultural Development Bank, Industrial Development Bank and Mortgage Construction Bank, were liquidated in a series of reforms proposed by the IMF under the ‘Poverty Reduction, Growth Facilitation’ programme aimed at minimizing state control of the economy. 3  Chang (2002) states that the ‘minimal state’ argument was one among three, and arguably the most extreme, neoliberal approaches to tame the ‘market failure’ debate that had become a central theme in political economy by the 1970s (including among neo-classical economists). The argument was used to advance the view that ‘market failure’ was marginal and can be seen only in such areas as defence, law and order and the provision of large-scale infrastructure. Hence, if state involvement is inevitable, it should be based on the principle of ‘minimal state’ to only encompass the aforementioned areas. 4  A government bureau dismantled in 2015 and its responsibilities transferred to ACBR-IP.

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In the area of trade ‘liberalization’, a 2005 IMF review of Afghanistan’s economy applauded the country’s adherence to a liberal tariff regime, acclaiming it as one of the most liberal regimes in the region with a simple average of 4 per cent (IMF, 2005). However, a coherent trade policy did not accompany this extent of ‘trade liberalization’, the first such policy formulated by the Ministry of Industry and Commerce only in 2019, which advocated for a competitive private sector as a way to promote exports (Ministry of Industry and Commerce, 2019). A ‘national export strategy’ was devised a year before but focused on the primary sector (Afghanistan Ministry of Industry and Commerce, 2018). Regarding privatization and liquidation of state assets, another major document officially succeeding the Bonn Conference Agreement, called The Afghanistan Compact and signed between Afghanistan’s government and its international donors in London (United Kingdom) in 2006, stated that “the Government’s strategy for divestment of state- owned enterprises will be implemented by end-2009” (Government of Afghanistan, 2006). Confirming Afghan government compliance with its policy recommendations, the 2008 Afghanistan PRSP approved by the IMF stated that “the government is committed to policies conducive to a private sector-­ led market economy that delivers high, sustainable economic growth” (IMF, 2008a). In the area of achievements on the 2006 PRSP, the 2008 report attests that in the past two years the Afghan government had been successful in bringing down inflation to “single digits” and “monetary policy had been supported by adherence to strong fiscal discipline and a ‘no overdraft’ rule that prohibits the Central Bank from financing the deficit” (IMF, 2008b). Concerning a more consequential area for resource allocation, a new banking regulation proposed by the IMF early on in the post-2001 period was enforced by an Afghan government decree and enshrined as the country’s banking law in 2003 (Fitrat, 2018). According to article 3 of the new banking law (Central Bank of Afghanistan, 2003), the central bank was declared “entirely independent” of the government. Article 2 delineates its main task as achieving and maintaining domestic price stability, followed by adopting flexible exchange rates and the guarantee of loan repayment. Price stability and inflation control are among the main tenets of the Washington Consensus reforms, termed “stabilisation” (Williamson, 1990). Other forms of government control over the financial sector, such as capital control measures (the measures regulating the inflow and outflow of capital in a country’s economy), were excluded from the 2003

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banking law. The central bank could no longer be integrated into a development policy and was tailored to handle monetary affairs only, its involvement in development policy limited to providing consultation to the government and commercial banks in the areas of debt and financial management. This put strict limits on the government’s ability in the banking sector to channel credit into target sectors, or if it required deficit spending through a state-run financial system (Del Castillo, 2008, pp. 161–190). The 2003 Banking Law follows what Epstein (2009) calls “neo-liberal” banking, which has been advocated by the IMF in the last three decades, focused on ensuring central bank independence, its monitoring and enforcement of macro-economic stability and inflation fighting, and application of monetary policy as an economic growth strategy. Short-term interest rates as against direct methods such as credit ceilings are relied on to spur private investment and economic growth—underlined by the assumption that lower interest rates would encourage borrowing and investments in Kabul (in the same way, presumably, it might in New York, Shanghai or elsewhere). In the area of manufacturing sector development, a 2011 Afghanistan Ministry of Commerce and Industry Policy paper called ‘Strategic Industrial Objectives’ outlines the government’s strategy as the creation of: a socially responsible market economy …, in which sustainable and equitable growth is private sector led and leads to increased employment, higher living standards and the reduction of poverty, in which competition operates for the benefit of all. (Afghanistan Ministry of Commerce and Industry, 2011)

The paper enumerates a few objectives, including “[to] improve the enabling and regulatory environment for business and Afghanistan’s DBI5 ranking; improve international competitiveness and trade; industrialise Afghanistan through increased exports and import substitution; ensure the private sector operates fairly and equitably; ensure pro-poor growth; and promote the market economy and increase understanding of how it operates”. The paper acknowledges that the Ministry did not have the mechanisms and “structural resources” to deliver on its supportive role in relation to the private sector, pointing out some “weaknesses” affecting industrialization, including “lack of clear policy relating to industrial parks, 5

 World Bank’s Doing Business Indicators.

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lack of clear policy relating to SOEs and other Ministry-owned or managed assets, no trade policy in place, lack of information on markets and competitiveness needed to develop policy, complicated and opaque processes for auctioning SOEs and other MoCI [Ministry of Commerce and Industry] assets, lack of shared vision within MoCI, confusion over high level co- ordination groups—Afghan National Development Strategy, Ministry Clusters, National Priority Programs, etc., no communications strategy in place for the Ministry, limited contact with the provinces, poor links with private sector and civil society, leading to inability to respond to the emerging needs of businesses, and no budget for renovation and maintenance of SOEs”. The paper adds that a legal framework to ensure “equitable” access to a “freely competitive market” does not exist and legal guarantees to protect consumers from “unscrupulous” behaviour were absent. Yet, the policy was largely based on the view that these legal shortfalls should be surmounted to provide the space for “free competitive” individuals to participate in the economy. The emphasis on legal and regulatory adaptation with EEA was given in the 2015 Afghanistan National Peace and Development Framework (the last 5-year development strategy that ended in 2020). Based on my interview with a high official at the Presidential High Economic Council in June 2018—an executive body at the Presidential Palace during President Ashraf Ghani’s tenure—promotion of the private sector remained the main focus of government industrial policy. The government facilitated private sector activities in the country but did not get involved directly in resource allocation. The policy followed was marked more by indirect service provision than providing direction, financial support and technological know-how. A tentative plan to revive SOEs was also abandoned by the government due to the new procurement legislation. Any government agency making a purchase beyond a certain limit required, based on the legislation, official approval from the National Procurement Authority, which made it difficult to run SOEs without significant time delays for securing needed funds. The 2019 Afghanistan National Trade Policy by Afghanistan’s Ministry of Industry and Commerce largely reiterated the EEA ‘rationale’ while acknowledging that the trade deficit was at the time $6.5  bn (37.7 per cent of Afghanistan’s GDP and more than eight times the value of its exports)—a reality that had remained consistent for most of the post-2001 period. It appears that early on the market-oriented policy witnessed some resistance from “some constituencies … [who] dispute government’s

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policies and advocate for … increasing government interference in the economy”, according to an IMF 2006 report. The report adds that “[IMF] staff advised the [Afghan government] authorities to keep the focus on the long-term benefits of market-oriented policies” (IMF, 2006b). The staff paper also reports that “the [Afghan government] authorities also raised the possibility of an increase in import tariffs, with a view to increasing revenue while protecting the domestic industries. [IMF] Staff cautioned strongly against such an approach”. Many of the above policies were adopted without consultation with public representatives because Afghanistan’s first post-2001 parliament began work after the first parliamentary elections in late 2004. In the case of the 2002 NDF strategy, it was not translated from English into Persian for wide distribution, and regarding the 2004 SAF strategy, the Ministry of Finance reportedly did not even have the approval of the cabinet of Ministers of the Afghan government before the World Bank submitted it to donors seeking their endorsement (Del Castillo, 2008, pp. 170–171). Similarly, the 2003 Afghanistan Banking Law was, in fact, written originally in English and was only later translated into Persian (Fitrat, 2018). In a sign of disjuncture between EEA and public perception of ‘development’, the Ministry of Commerce and Industry paper on the promotion of the manufacturing sector notes that “many Afghans do not perceive the move to a market economy as positive”, which, therefore, had made it imperative that the Ministry should “continue to persuade the Afghan people of the benefits of the market economy and to identify and exploit opportunities for private sector led growth”. This incompatible tendency between EEA and public opinion was pointed out by Fishstein’s (2010) research in five important provinces of Afghanistan, recognized as regional hubs, suggesting that the market-oriented policy was inconsistent with the Afghan notions of ‘social justice’. Neglect of pre-1978 SOEs was frequently criticized by the participants in the survey, while visible signs of development (factories, hospitals, dams, airports, etc.) were commonly perceived more favourably as signs of ‘progress’.

4.1   Post-2001 Aid Expenditure in Afghanistan Aid expenditure formed the financial dimension of the overall post-2001 military engagement in Afghanistan. The US government and UN involvement in post- 2001 Afghanistan was initially not meant to incorporate aid expenditure, or at least not at the levels that were later witnessed as a result

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of a rise in commitment. The multinational troops under the UN Security Council-mandated International Security Assistance Force (ISAF)6 were originally only deployed to Kabul and a ‘light footprint’ strategy was advocated by UN envoy to Afghanistan Lakhdar Brahimi, characterized by a policy of mostly facilitating the transition to a post- Taliban government (Traub, 2006; Del Castillo, 2008, p. 172). A sense of urgency was witnessed among US government leadership, civilian and military, in the early stages of planning the war in November 2001 to rapidly execute it to allow for leaving Afghanistan’s battlefield without prolonged engagement (see Woodward, 2002 for detail). The ISAF’s operation was projected to terminate following achieving its mission of ‘neutralizing’ the individuals accused of having a hand in the 11 September 2001 attacks and after establishing the security conditions for a post-Taliban political administration in Kabul. In view of Taliban’s resurgence in late 2002, this strategy had to be replaced with a new one in four stages, leading to the state building project that began to encompass, among others, state institution building and a variant of a presidential representative democracy (Suhrke, 2008), as well as financial commitment in the form of aid. Bilateral official development assistance (ODA) to Afghanistan during 2001–2021 by the country’s international partners was administered mainly by four multilateral trust funds: F1. Afghanistan Reconstruction Trust Fund (ARTF)—managed by the World Bank F2. Law and Order Trust Fund for Afghanistan—managed by the United Nations Development Programme (UNDP) F3. Afghan National Army Trust Fund—managed by NATO F4. Afghanistan Infrastructure Trust Fund—managed by the Asian Development Bank The largest recipient of aid money among the above funds was F1, which, coupled with F2, F3 and another smaller fund that was coordinated by the UN Office for Coordination of Humanitarian Affairs,7 received the cumulative amount of $30.278 bn between 2002 and 2019 (SIGAR, 2020a). The countries and organizations who donated to this 6  ISAF was terminated in December 2014 and the US-led coalition was later recognized simply as a NATO mission. 7  UNOCHA leads emergency appeals and humanitarian response plans for Afghanistan.

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fund included the United States, Japan, the United Kingdom, Germany, the European Union, Canada, Australia, the Netherlands, Norway and Italy. Apart from the above funds, countries spent aid money through their own government and development agencies. ‘Militarized’ aid expenditure (aid money spent in pursuit of the military objective) was responsible for absorbing the bulk of the aid money spent in Afghanistan by its largest donor, the US government. As the main aid contributor to Afghanistan’s reconstruction, the US Congress appropriations (legal authority for US Federal agencies to incur financial obligations) stood at $137.86  bn8 for Relief, Reconstruction and Civilian Operations (RRCO) from fiscal year 2002 until June 2020 (SIGAR, 2020b). The above amount also included appropriations by the US Department of Defense (DoD), which, at the same time, were accounted for in the ‘Cost of War’ estimations. The cumulative DoD obligations, including its contribution to the RRCO and warfighting costs by US troops in Afghanistan, had reached $776  bn by 30 September 2019 according to the Department’s ‘Cost of War’ report (United States Department of Defense, 2019). The US aid expenditure in Afghanistan was integrated into the wider “counter-insurgency” strategy by the US DoD directive 3000.05 in 2005, aiming to pacify rural elders and rally their cooperation with counter-­ insurgency operations through monetary enticement, leading to a majority of the aid being spent in restive southern and eastern provinces (Fishstein, 2010). The rising share of the military’s involvement in aid expenditure in Afghanistan can be illustrated in the comparative ratio of aid money spent by USAID (a civilian outlet) and the DoD. The latter’s share continuously increased during US fiscal year 2002 through 30 September 2019 (the last year with disaggregated data I could access), appropriating the majority of the US government contribution to the RRCO.  During this period, total cumulative appropriations by the US DoD reached 64.48 per cent of the aggregate amount. By comparison, appropriations by USAID were 19.9 per cent and by the Department of State 14.4 per cent, the remaining appropriated by other US government agencies (SIGAR, 2020a). After scaling up drastically the troop numbers by the administration of President Barack Obama in 2009, the 8  A comparison is in order. The amount spent by the United Sates on European Recovery Program (so-called Marshall Plan) after WWII was a nominal $12 bn amount, equivalent to $128 bn as of 2020 after adjusting to inflation.

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‘counter-insurgency’ effort in Afghanistan saw the DoD occupying an even more prominent role in aid expenditure and “private sector development”, to whose priorities USAID had to now submit in order to pursue a “unified US response” (SIGAR, 2018). To illustrate, regarding one fund, the Commander’s Emergency Response Program (funds allocated for use by US military commanders on the ground for urgent humanitarian relief and reconstruction requirements in their areas of responsibility), cumulative aggregate funds allocated to it had increased from none in 2003 (Fishstein, 2010, p. 13) to $3.7 bn through fiscal year 2019 according to SIGAR’s July 2020 quarterly report (SIGAR, 2020b). The other instruments used by the DoD for private sector development were ‘Afghan First’ procurement, meant to increase purchase from domestic producers for US-funded projects, and the ‘Task Force for Business Stability Operations’, a policy replicated from the Iraq invasion experience. The US DoD did not contribute only to the reconstruction of Afghanistan’s security sector. In one non-security sector-­ related assistance, the Department paid $10.4  m to the American University of Afghanistan,9 one of the largest US government projects in Afghanistan’s education sector, making the Department one of the main US agencies together with USAID and the Department of State to fund the project (SIGAR, 2020b). A major part of the RRCO fund was spent in re-arming and policing Afghanistan, as was indicated in SIGAR figures. Of the total $137.86 bn appropriated for RRCO by June 2020, $80.95  bn (58.7 per cent) had been appropriated for the Afghanistan Security Forces Fund, spent on three areas: Defence Forces (Afghan National Army), Interior Forces (Afghan National Police) and Related Activities (primarily Detainee Operations). The second largest reconstruction fund was the Economic Support Fund, with a cumulative disbursed funding of $21.05 bn by June 2020. This fund, despite its name, was not meant expressly for economic development and was designated to support counterterrorism, bolster national economy, and assist in the development of an effective, accessible, independent legal system for a more transparent and accountable government. It also covered sectors such as health, education and gender 9  The University—still active—is not public and charges an annual total fee of approx. $25,000 according to its student financial manual (American University of Afghanistan, 2019). To give this fee a context, refer to footnote 47 on page 261 for a brief overview of cost of living in Afghanistan based on consumer price index.

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equality, rule of law, anticorruption initiatives, alternatives to illicit trade (narcotics), agriculture, power generation and governance. This was, in effect, roughly aligned with the purpose of establishing EEA in a comprehensive mandate. Following the above fund, the Commander’s Emergency Response Program had received the largest amount. In comparison, the Afghanistan Infrastructure Fund, jointly managed by the US DoD and the US Department of State for supporting the civilian–military effort, had appropriated $0.98 bn (of which $0.65 bn was disbursed) before it was discontinued in 2014. Similarly, the Task Force for Business and Stability Operations designed for countering economically motivated violence, and discontinued in March 2015, had appropriated $0.82  bn (of which $0.64 bn had been disbursed). Based on a 2015 study (Desai and Lutz, 2015), most of the USAID projects in Afghanistan up until then had been handled and delivered by ten US-based private companies, receiving 58% of the contracts (the Louis Berger Group, Black and Veatch, DynCorp, PAE, Civilian Police International Halliburton, Fluor and Chemonics), while beneficiaries of US DoD contracts were also mainly US corporations. Endemic corruption in aid expenditure led to the debarment of 997 individuals and companies (554 individuals and 443 companies) from dealing in Afghanistan by SIGAR during 2008–2020 (SIGAR, 2020a). *** The shift to defence, diplomacy and development or an “integrated approach” can be noticed in many counter-insurgency strategies other than those of the United States, as is seen in the creation of new agencies within foreign ministries in the European Union and Canada during the past decade (Fishstein, 2010). Designated as “Post-conflict Reconstruction Unit”, “Coordinator for Reconstruction and Stabilization” or the “Stabilization and Reconstruction Task Force” in the United Kingdom, the United States and Canada respectively, this security-led aid expenditure, despite approaching counter-insurgency operations as a combined effort pressed forward by the trio of military force, diplomacy and development, also faces the issue of force protection. Populations with better roads and bridges built with foreign aid money are thought to be less aggressive and more cooperative with the foreign armed forces deployed to their towns and villages.

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Following the same strategy, the approach to aid expenditure by the United States in Afghanistan was put under the rubric of “stabilization”, a term defined by US DoD directive 3000.05 as: … an inherently political endeavour that requires aligning U.S. Government (USG) efforts—diplomatic engagement, foreign assistance, and defence— to create conditions in which locally legitimate authorities and systems can peaceably manage conflict and prevent violence. (United States Department of Defense, 2005)

The strategy document treats “stabilization” as a necessary complement to active combat at the “tactical, operational and strategic levels”, insisting that the objective stabilization should pursue is to turn combat success into lasting strategic gain. The document further states that: Fragile and conflict-affected states often serve as breeding grounds for violent extremism; transnational terrorism and organized crime; refugees and internally displaced persons; humanitarian emergencies; the spread of pandemic disease; and mass atrocities. Stabilization can prevent or mitigate these conditions before they impact the security of the United States and its allies and partners.

This articulation follows in the path of development discourse by the United States during the Cold War, which viewed development assistance in terms of a security rationale—such assistance was seen as necessary back then to counter Soviet influence and justify interventions in developing countries (Rajagopal, 2008). Pitting “communism” against “freedom”, in one instance of such a strategy the US Secretary of State John Foster Dulles stated in a 1956 statement that “we are in a contest in the field of economic development of underdeveloped countries, … defeat … could be as disastrous as defeat in the armaments race” (New York Times, 1956). With the Cold War’s end, the change of language, now centred on “fragile and conflict-affected” states, calls attention to other resultant security dangers from lack of development, such as the “spread of pandemic disease, and mass atrocities”. The problem of “poverty” in developing countries, in general, which was back in the agenda of IFIs by the late 1980s after a period of falling out of sight during US President Reagan’s tenure (Williamson, 1990), was increasingly interpreted—including by the UN’s Millennium Development Goals—in terms of a security problem as much

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as a developmental issue (Rajagopal, 2008). The ‘stabilization’ lens views economic, social, political and cultural phenomena through a security-led prism, in a classic case of ‘epistemic closure’ (Mac Ginty, 2012). As a general guide for tactics, the 2005 US DoD directive insists on “small-footprint, partner-focused stabilization” that includes indigenous and other external partners. However, when it comes to aid expenditure, pronouncing support for ‘national ownership’ did not preclude fundamental detachments between the United States and other donor country priorities with the realities on the ground in Afghanistan. This non-­ alignment, according to Goodhand (2010), was aggravated by the asymmetry of relations between internal and external actors, the fractured nature of global and national governance, and the mismatch between military and long-term development priorities. This was when, even for its purported objective of bringing stability, a US Senate Foreign Relations Committee report (2011) cast doubt on the effectiveness of using aid as an instrument for stabilization not long after the 2005 DoD directive, estimating the monthly amount of aid spent in restive southern and eastern provinces at 80 per cent of the aggregate amount allocated to Afghanistan, without seeing the intended results. Aid money continuously declined in the post-2014 period—the year that marked the terminating point of a drastic reduction in the US-led international coalition forces that had begun in 2011, with major combat responsibilities handed over to Afghanistan’s army and police forces thereafter. For instance, the United States’ contribution to RRCO had in general decreased since 2014; more precisely the funding categories ‘governance/development’ and ‘civilian’ had shrunk to a small fraction of their pre-2014 levels (SIGAR, 2020b, pp. 43–44). The funding allocated to the category ‘security’ had remained relatively unchanged, but the overall ‘annual appropriations’ of funds had decreased from $9.64 bn in 2013 (approximately 46.9 per cent of Afghanistan’s GDP at the time) to $4.89 bn in 2019 (approximately 25.2 per cent of Afghanistan’s GDP in 201810)—the reduction mainly witnessed in non- military development funds. In addition to reduction in aid expenditure, the 2012–2014 drastic drawdown of the United States and international military and civilian presence in Afghanistan had a weakening effect on economic growth. Based on the 2011 US Senate Foreign Relations Committee report (citing a World Bank estimate), Afghanistan’s GDP was 97 per cent derived from  The last year, at the time of writing, for which GDP figures are available online.

10

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“spending related to the international military and donor community presence”. The 2014 reduction in the number of troops and international civilians erased this source of GDP growth to a large extent.

4.2   Market-Oriented Reforms and Conflict-Affected Contexts Specific IFI policy for post-conflict reconstruction per se has mostly been absent in the post-World War II period (Kreimer et  al., 1998). As suggested by Del Castillo (2008), reconstruction issues in post-conflict situations have been treated as “development as usual”, especially concerning the economics of a post-conflict situation (Del Castillo, 2008; Bannon, 2010). The World Bank 1998 document titled The Framework for World Bank Involvement in Post-Conflict Reconstruction was the first to partially draw attention to this area, which was centred on World Bank ‘best practices’ for economic development (Kreimer et al., 1998). The Framework states that “a great deal remains to be learned” in post-conflict reconstruction and that “lack of clearly defined guidelines” in this area has previously affected Bank performance. The Framework emphasizes “rational policies of reconstruction and sound macroeconomic policies” by host country governments to ensure sustainability of the reconstruction mission, further insisting on a “dynamic private sector … for a vibrant post-conflict economy”. John Williamson (2000) notes that in IFI parlance best practices are policies that facilitate structural adjustments and reduce “the role of government”, such as “privatization and the liberalization of trade, finance, FDI [foreign direct investment] entry and exit”. In its inquiry into the topic of resource allocation, classical and early twentieth-century political economics studied an equilibrium state, that is, a hypothetical condition where society’s material resource allocation is achieved, reflected in prices, in such a way that any restructuring of it might have a higher disadvantage than any net gain. Samuelson’s influential textbook Economics, for instance, does not include a section on the economics of war except for passing remarks (Samuelson, 1967). The study of allocation from this standpoint presupposes a time of political stability and peace, considering that achieving ‘economic equilibrium’ is already hard and constitutes the subject matter of economic research despite there being peace. Peace was considered more natural given the historical and ideological environment of the eighteenth century when the

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foundations of classical political economy were laid down (Milward, 1979). As such, times of war are treated as political “disturbances or anomalies, they are mostly excluded in mainstream economic theorizing. Whereas the price mechanism is seen as the main signal for allocating scarce resources according to the market theory” (Mickiewicz, 2010), at least in one important instance in the history of war (World War II), prices were largely ignored because they were slow and risky to rely on (Milward, 1979, p. 100). But these ‘exceptions’ have not been built up into theories of war-time material allocation in mainstream thinking—an approach also underlying EEA. Situations of war, therefore, should invite rethinking regarding the application of mainstream RCT-based economics. However, based on an ontological assumption that takes human motivation as universally uniform, the RCT epistemology is applied in situations of conflict as well. In fact, market-oriented policy is seen as a solution for war itself, to the effect that the ‘sound conducts’ promulgated by this approach at the global level, if adequately endorsed and implemented, are believed to assuage the motives for conflict or aggressive competition both internally and externally. Its ideal of a unified world brought close by trade and economic openness with little or no regional or national particularities, characterized as “liberal peace”, is seen as morally and economically significant to discourage intra-state and inter-state wars (Rampton and Nadarajah, 2017). The origins of this thinking go back, in various forms, to medieval Europe (see Hirschman, 2013, for a discussion on the separation of ‘passions’ and ‘interests’, the latter concept emerging as a counterweight to dissuade violence). Related to commerce, Benjamin Constant, a Swiss French politician and thinker of the late eighteenth and early nineteenth centuries, argued in his pamphlet The Spirit of Conquest and Usurpation that modern commerce would bring nations so close through mutually beneficial relations so as to make wars unprofitable and a dangerous disruption (Constant as cited in Callinicos, 2012). The subsequent analysis of empirical data here does not revisit ‘liberal peace’, and its mention here was only to show the extent to which market-oriented thinking is turned into a solution to war-time as well as peace-time development.

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References Acemoglu, D., and Robinson, J. A. (2012). Why nations fail? Crown Publishers. Afghanistan Authority for the Coordination of Assistance. (2002, April). National development framework. Draft Policy Paper, Afghanistan Interim Administration. Retrieved December 11, 2016, from https://sites.google.com/site/afghanpolicysite/Home/afghanistan-­national-­development-­framework-­ndf Afghanistan Investment Support Agency. (2012). Essential facts on economic performance and Investment in Afghanistan. Research and Statistics Department. Afghanistan Ministry of Industry and Commerce. (2011). Strategy plan 2011–2015. Retrieved February 1, 2017, from http://moci.gov.af/Content/files/MOCI %20Strategic%20Plan%20FINAL%2029%2 0Oct%202011%20ENG.pdf Afghanistan Ministry of Industry and Commerce. (2018). Afghanistan’s National export strategy 2018–2022. Retrieved January 3, 2019, from https://www. intracen.org/uploadedFiles/intracenorg/Content/Redesign/Projects/A AT/AFG_Main%20NES.pdf American University of Afghanistan. (2019). Student financial manual. Retrieved May 3, 2020, from https://auaf.edu.af/media/1903/student-­finance-­ manual_approved-­version_24feb2020.pdf Bannon, I. (2010). The role of the world bank in conflict and development. World Bank document. Retrieved August 9, 2016, from http://siteresources.worldb a n k . o r g / I N T C P R / 2 1 4 5 7 8 -­1 1 1 2 8 8 4 0 2 6 4 9 4 / 2 0 4 8 2 6 6 9 / ConflictAgenda2004.pdf Callinicos, A. (2012). Social theory: A historical introduction (2nd ed.). Polity Press. Central Bank of Afghanistan. (2003). The Afghanistan Bank Law. Retrieved October 6, 2016, from https://dab.gov.af/sites/default/files/2018-­12/ DABLaw1English_2.pdf Chang, H. J. (2002, May). Breaking the mould: an institutionalist political economy alternative to the neoliberal theory of the market and the state. Report, Social Policy and Development Program Paper No. 6, United Nations Institute for Social Development. Del Castillo, G. (2008). Rebuilding war-torn states. Oxford University Press. Desai, S., and Lutz, C. (2015). US reconstruction aid for Afghanistan: The Dollar and sense. Watson Institute for International Studies, Brown University. Epstein, G. (2009). Post-war experiences with developmental central banks: The good, the bad and the hopeful. G-24 Discussion Paper Series, No. 54. Fishstein, P. (2010). Winning hearts and minds? Examining the relationship between aid and security in Afghanistan’s Balk Province. Feinstein International Centre, Tufts University. Fitrat, A. Q. (2018). The tragedy of Kabul Bank. Page Publishing, Inc. Goodhand, J. (2010). Who owns peace? Aid, reconstruction and peacebuilding in Afghanistan. Disasters, 34(s1), 78–102.

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Government of Afghanistan. (2004). Securing Afghanistan’s future. Retrieved May 5, 2017, from http://www.marksedra.com/Mark_Sedras_Site/About_ Me_files/securing-­ afghanistan-­future-­final.pdf Government of Afghanistan. (2006). The Afghanistan compact. Retrieved May 1, 2017, from https://www.diplomatie.gouv.fr/IMG/pdf/afghanistan_ compact.pdf Hanifi, S.  M. (2012). Quandaries of the Afghan nation. In S.  Bashir and R. D. Crews (Eds.), Under the drones: Modern lives in the Afghanistan-Pakistan borderlands (pp. 83–101). Harvard University Press. Hirschman, A. (2013). The passions and the interests. Princeton University Press. IMF. (2005). Islamic Republic of Afghanistan: Third review under the staff- monitored program and request for an extension. Report, IMF, Country Report No. 05/128. IMF. (2006a). Islamic Republic of Afghanistan: Interim poverty reduction strategy. Report, IMF, Country Report No. 06/195. IMF. (2006b). Islamic Republic of Afghanistan: Interim poverty reduction strategy paper—Joint staff advisory note. Report, IMF, country report no. 06/252. IMF. (2008a). Islamic Republic of Afghanistan: Poverty reduction strategy paper. Report, IMF, Country Report No. 08/153. IMF. (2008b). Poverty reduction strategy paper—Progress report. Report, IMF, Country Report No. 08/73. Kreimer, A., Eriksson, J., Muscat, R., Arnold, M., and Scott, C. (1998). The World Bank’s experience with post-conflict reconstruction. The World Bank. Mac Ginty, R. (2012). Against stabilization. Stability, 1(1), 20–30. Mickiewicz, T. (2010). Economics of institutional change: Central and Eastern Europe revisited (2nd ed.). Palgrave Macmillan. Milward, A.  S. (1979). War, economy, and society 1939–1945. University of California Printing Press. Ministry of Industry and Commerce. (2019). Afghanistan National Trade Policy. Policy Paper, Government of the Islamic Republic of Afghanistan. New York Times. (1956, January 12). Transcript of Dulles news conference on economic contest with Soviet Union. New York Times. Retrieved November 12, 2019, from https://timesmachine.nytimes.com/timesmachine/1956/ 01/12/issue.html Rajagopal, B. (2008). Invoking the rule of law in post-conflict rebuilding: A critical examination. William and Mary Review, 92, 1345–1374. Rampton, D., and Nadarajah, S. (2017). A long view of liberal peace and its crisis. European Journal of International Relations, 23(2), 441–465. Samuelson, P. (1967). Economics (7th ed.). Mc-Graw hill. Special Inspector General for Afghanistan’s Reconstruction. (2018, April). Private sector development and economic growth: lessons from the US experience in Afghanistan. Report, Office of the SIGAR.  Retrieved March 2, 2019, from ­https://www.sigar.mil/pdf/lessonslearned/SIGAR-­18-­38-­LL-­Executive-­ Summary.pdf.

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Special Inspector General for Afghanistan’s Reconstruction. (2020a). March Quarterly report to US Congress. Retrieved 8 April 2020, from https://www. sigar.mil/pdf/quarterlyreports/2020-­04-­30qr.pdf Special Inspector General for Afghanistan’s Reconstruction (2020b). July Quarterly report to US Congress. Retrieved July 6, 2020, from https://www. sigar.mil/pdf/quarterlyreports/2020-­07-­30qr.pdf Suhrke, A. (2008). A contradictory mission? NATO from stabilisation to combat in Afghanistan. International Peacekeeping, 15(2), 214–236. Traub, J. (2006). The best intentions: Kofi Annan and the UN in the era of American world power. Farrar, Straus and Giroux. United States Department of Defence. (2005). Directive 3000.05: military support for stability, security, transition, and reconstruction (SSTR) operations (p. 2). United States Department of Defence. (2019). Cost of war report. Retrieved April 4, 2020, from https://fas.org/man/eprint/cow/fy2019q4.pdf United States Senate Committee on Foreign Relations. (2011). Evaluating us foreign assistance to Afghanistan. Retrieved February 5, 2016, from https://www.foreign.senate.gov/imo/media/doc/SPRT%20112-­21.pdf Williamson, J. (1990). What Washington means by policy reform. In J. Williamson (Ed.), Latin American adjustment: How much has happened. Peterson Institute for International Economics. Williamson, J. (2000). What should the World Bank think about the Washington consensus. Peterson Institute for International Economics. Woodward, B. (2002). Bush at war. Simon & Schuster.

CHAPTER 5

Method

5.1   Ontology and Epistemology I believe social reality to exist with objective content independent of the human mind, and to exist as a multiplicity of beings: the variety of ways that nature is differentiated into and can be identified, perceptible to the human mind as representations of different things in themselves (i.e. chair, table, earth, human, cat, plane, sea, etc.). This viewpoint aligns with ‘dialectical materialism’ or realist ontology, which accords primacy to content and being over form (i.e. the ideal) and thought (Kipfer, 2009). Dialectical materialist ontology is encapsulated in the concept of “social formation” by Marx and Engels, who argue that “consciousness can never be anything else than conscious being” (Marx and Engels, 1998, pp.  36–37). The ‘form’ of individuals in the process of becoming a conscious being is determined, among others, by their production, which not only entails physical production and reproduction, but also a definite form of expressing life on an individual’s part. The human, in this view, is the empirically perceptible grounds of social reality, rather than being an ideal or a subjectively constructed phenomenon in an abstract rigidity (as with the dead facts in the case of empiricists or the imagined subjects of the idealist). This ontology views social reality as amenable to empirical research through sense experience and observation (for a discussion on the distinction between this and other approaches to social inquiry, positivism, empiricism and rationalism, see May, 2011, and Markie, 2017). © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 K. Rafi, Patriarchal Hierarchy, https://doi.org/10.1007/978-3-030-98407-6_5

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On the other hand, in this tradition direct experience of the social object is seen beyond human mental reach, that is, immediate understanding of the social object is taken to mean reality corresponding directly with what humans observe, in which case there will not remain a reason for systematic inquiry (Harvey, 2012). In social theory, the principle of ‘non-­ consciousness’ suggests that contrary to the “illusion of transparency” to which all members of the society are spontaneously inclined, social life can be “explained by causes that are irreducible to individual ideas and intensions” and social subjects are not in possession of the totality of the meaning of their actions (Wacquant, 1992). It is the discovery of the structure that underpins and regulates social practice that forms the subject matter of social scientific research in this tradition—including this book. This epistemology does not view social agents’ motivation as uniform— material allocative motivation in this research— and hence universal concepts such as the ersatz human are seen as “reductionist”, that is, they tend to reduce the complexity of a social reality, event or process to a few identifiable variables which can be misleading (see Bourdieu, 2000, for elaboration). Moreover, axiomatic taken-for-granted habits in societies with the modern esprit de calculation predominating them, such as wage, savings, credit, birth control and so on, have definite social conditions of possibility provided by social norms, collective memory, traditional institutions, formal and informal channels of reciprocity, and so on, within which economic activities are conducted in an embedded form (Bourdieu, 2000). Thus, the book’s framework takes the issue of situatedness (a la Bourdieu) as a point of departure, not to relativize social action but to connect both the subjective and the objective social structures as relevant in providing an explanation for human economic practice. It is the effects of these structures and the institutionalized normative and rule-based behaviour that they transmit that the empirical study in the book has attempted to investigate. One important role—perhaps the most important—that habitus as a “thinking tool” (a la Bourdieu) plays in research is that it overcomes the false antinomy of the subjective and objective by studying the dialectical relationship of the two as determinant of human practice, neither prioritizing objective structure nor benefiting human agency by viewing it as being in total control of decision-making. The book’s epistemology is close to what Norman Blaikie has referred to as retroductive strategy of research, which involves moving back from observation of data to the “creation of a possible explanation” (Blaikie,

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2011, p.  3). It, therefore, begins with gathering empirical data, which, according to Grenfell (2008), is required for a study adopting a Bourdieusian framework. This epistemology is apposite for answering the research questions given that neither empiricism (correlation of observed facts) nor idealism (interpreting events only from the actor’s point of view) is adequate—due to the reasons given above—to understand and explain what lies beyond observed patterns of behaviour among investors in Kabul’s manufacturing sector. The research has sought to find objective embodiments that lend themselves to research that corresponds to an underlying mechanism, seeking ‘tendencies’ (May, 2011) rather than a relation of cause and effect. I relied on the explicit accounts given by the participants to discover the patterns in data that represent these objective embodiments. This source of information is used to construct the normative and rule-based dispositional social practice determined by individual habitus as the underlying mechanism, most importantly how habitus as a generative mechanism shapes the horizon of professional expectations, hence conditioning the (a) entry into the manufacturing sector, (b) subsequent interaction with the field of production and (c) formulation of adaptive strategies to ensure investment continuation. This empirical analysis has been used, in a subsequent step, to understand the (in)significant role manufacturing retained in the structure of the economy and to what extent it reproduced the prevalent hierarchy of power (patriarchal family structure) in the production sector. Finally, these empirical analyses are relied on to argue that in a context like Kabul the knowledge of manufacturing had to be brought from the outside through bureaucratic intervention of the state to render it a taken-for-granted reality among extant life-chances (a professional possibility). The study might appear at times theoretical and at times concerned with the observed details of a particular case (its concrete mechanics as they appear). However, such a distinction between theory and observed descriptive facts might be unnecessary, for I believe theory is (or ought to be) the articulation of an observed reality a few levels of abstraction removed. The study is, therefore, not informed by concern to build a sound theory of a particular case, nor does it take the examination of the empirical details to such an extent that it forgets their relevance to theory—it intends, to the extent possible, to work back and forth between the two.

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5.2   Data Collection Technique and Research Tool I used conversational interviews (CI) with open-ended semi-structured questionnaires for qualitative data collection. Research (Mittereder et al., 2018) suggests that compared to standardized interviews, the CI format—which differs from the former based on the interviewer’s reaction to respondent confusion (CI being responsive)—has been shown to improve response accuracy. I also found the conversational method appropriate to the context because I anticipated lack of prior exposure to the questionnaire topics among the participants. The CI method could also capture the descriptive potential of language in participant accounts (see Legard et  al., 2003, p.  138 for details). Interviews were conducted in Persian (Kabul dialect) as the most commonly spoken language in the city and transcription was done in the original language (for reasons that are given below under “Thematic Analysis”). Of the 62 interviews conducted, eight were with relevant officials and 54 with investors. Research objective ‘1’ (see Chap. 1, Sect. 1.1.) set the direction for the choice of participants in the study considering that the sources of information for both were the investors or, when they were unavailable in rare cases, the superintendents with an official designation (e.g. marketing officer or general manager) who could provide the required information. Objectives ‘1’ and ‘2’ build on the accounts given by investors and objective ‘3’, as a continuation of objectives ‘1’ and ‘2’, evaluates structural shifts in the economy based on qualitative proxies (these proxies are explained below). The research data is primarily qualitative but was complemented by quantitative measures as an aid wherever necessary to identify statistical trends, approaching as such a ‘convergent parallel mixed method’ (Creswell, 2014). Predominantly, means and modes were drawn to this end. Some aspects of the analysis rely on quantitative data to arrive at conclusions, but often qualitative explanations retain their centrality. The full range of the use of numeric data is available in the analysis (Chaps. 7, 8 and 9). I prepared the questionnaire prior to travelling to the field and included 64 questions based on the following heuristic parameters: • Descriptive Information Regarding the Unit and production modality • Social status affiliation of the investor

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• Decision-making hierarchy in the unit • Reasons for Investment Continuation On average, 49 minutes were spent in interviewing participants. I ensured that the interviewee responses were focused on the questions, guiding their discussion back to the topics in case of prolonged digression. If the question was about the labour recruitment technique but the interviewee tended towards a discussion of the broader socio-political realities of Afghanistan in general, they were prompted to return to specific and concrete details regarding the question in hand. The value of a digression was meanwhile not ignored, not to lose the benefits of an accidental new direction in data collection. This minimized the time wasted in digressions and the interviews also lasted a shorter time to avoid interviewee fatigue, waning interest and repetitive off-the-cuff responses in a haste to end the session. Doing so necessitated a high number of back-to-back questions that did not leave unused time-gaps. With time, I could also anticipate from past interviews that, in response to a question, the interviewee might veer off topic. The questionnaire, being semi-structured, also helped to streamline the flow of the interview with pre-given signposts, helping the transition between different heuristic parameters. In addition to these, I familiarized the participant prior to beginning the interview to give them an idea of the themes in the questionnaire, a step that was also helpful in making the transitions without inducing a sense of puzzlement due to the shift between themes. The questionnaire was translated into Persian, and the same copy was used for most of the interviews where notes and reminders had been written to bring added structure. For 41 cases (80 per cent) I visited the production units for the interview to inspect the production site and gather field notes, which were used to divide the manufacturing industries in the research based on machine use (see “Case Selection” below for details)—the remaining 20 per cent, as they fell under one of the visited industries, could also be categorized in this way. The field visits corroborate the analysis of ‘asset specificity’—an important characteristic of this sector in the context (see Chap. 7, Sect. 7.1). The open-ended questionnaire method had the advantage of eliciting information in respondents’ own words, while giving the interview some structure. This might not have been possible with an closed-ended questionnaire, which can exclude important responses inadvertently due to its design (Babbie, 2013). Keeping in mind an iterative or constant comparative procedure (Leedy and Ormrod, 2000), I moved back from data

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collection to data analysis during the initial stage of the fieldwork. This was because paucity of literature on the research topic necessitated a period of open-minded exploration to reassess some of the themes in the initial research design and to refine items under each parameter in the questionnaire, which was mostly coterminous with the pilot stage, and thereafter the list of topics discussed in the questionnaire remained the same until the end.

5.3   Evolution of Research Question I derived pre-fieldwork RQs from online data regarding all forms of productive activities, including SOEs, cooperatives and private sector companies,1 made publicly available by the Ministry of Agriculture, Irrigation and Livestock (MAIL), the Ministry of Industry and Commerce (MoIC), the National Statistics and Information Authority (NSIA)2 and other relevant government departments. This proved highly misleading because data by MAIL on cooperatives and MoIC on SOEs had not been updated when both these sources were consequential for my initial design—prepared during 2016–2017—which took secondary sector cooperatives as one focal object. It was after entry into the field that these shortcomings came to light. The initial RQs aimed to answer whether deliberative (in the case of cooperatives) compared to top-down/hierarchical (in the case of SOEs and private enterprises) decision-making had a different effect on retaining productive capital in Kabul’s conflict-affected market economy. Although the initial RQs had to be modified, the initial hypothesis on the role of decision-making modality as a factor for ensuring investment continuation was appropriate (discussed in Chap. 8, Sect. 8.1). With some adjustments in the third heuristic parameter regarding the decision-making modality (now cleared of the questions regarding the deliberative component in decision-making) and despite the above changes, the initial questionnaire was adequate for answering the RQs adopted following entry into the field and the pilot study. 1  There might be many other forms that join two or three of the above categories in their management by various degrees and at various levels of management, but on the whole if decision-making modality on resource allocation and income distribution is taken as the denominator, an economy can encompass public, private or cooperative structures of governance. 2  Formerly ‘the Central Statistical Organization’ (CSO).

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5.4   Accessing Preliminary Data The first step in the field involved harnessing my social network to find an initial opening for data collection, contacting individuals I knew personally: friends, relatives and social acquaintances. The focus at this point was to gather preliminary data on cooperatives, SOEs and private sector units. Given the limitations for academic research in the context, this social network proved invaluable for setting off the initial data collection process. For accessing data on private sector investments (in general regardless of sectoral distinction), I set up a meeting with the director of Afghanistan’s business licence granting agency, ACBR-IP, through an intermediary. According to the ACBR-IP data base, of the 118,608 business licences issued in the post-2001 period, the majority were in trade (51.5 per cent),3 followed by “Construction” (27,935 or 23.6 per cent). Combined, these two sectors were responsible for 75.1 per cent of all the licences, and if we add “Transit”, “Transportation and Storage” and “Services”, the share of these five sectors, which fall under the ‘tertiary sector’ in the United Nations classification (United Nations, 2008), made up 88.7 per cent of the total licences issued. Hence, most of the business activities in the country were focused on the tertiary sector, followed by manufacturing4 (for a full drawdown of businesses by activity see Table A2 in the Appendix). However, these numbers did not distinguish whether these investments, including in the manufacturing sector, were still active at the time I accessed them—the reason why the data base was not regularly updated could be that the ACBR-IP did not have adequate technical personnel or there was lack of coordination between the department that registered and the one that formally confirmed closure. The problem of non-­ differentiation of active-closed units also applied to Kabul where 2251 investments for manufacturing (39.9 per cent of all manufacturing sector investments in Afghanistan) were registered. Among them, 2206 (98.0 per cent) were registered during the study period. Only 44 had been registered between 1970 (the year ACBR-IP data begins) and 2001 (see Table A3  in the Appendix for more detail). This supports the book’s premise explained in the introduction that private sector manufacturing mainly emerged in the post-2001 period in Afghanistan. 3  The data was given in bulk and disaggregated based on sector and province using MS Excel. 4  This is if we disregard the many duplications and many confusions in the classification of business activities in ACBR-IP data (e.g. “Transportation and Storage” and “Transport”).

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For cooperatives, I interviewed an official in MAIL who had researched cooperatives in Afghanistan for an academic study and was subsequently hired by MAIL—the sectoral ministry in-charge of all the cooperatives in Afghanistan—to conduct a survey on cooperatives in 22 provinces in 2012. This survey’s objective was to identify areas for reform. The survey recommended an overhaul (not just reform) of this sector. A new cooperative law was formulated by MAIL and, most importantly, the existing 3000 cooperatives registered in the post-2001 period (the information that had led to my pre-fieldwork research design) were dismantled considering that all of them operated as farmers’ associations and were dependent on government and NGO funding. They were not self-reliant business enterprises and could not pay taxes, which they were required to do by law. Based on the overhaul recommendation, existing cooperatives had to either re-define their legal status and register anew as non-profit “farmers’ associations” at the Ministry of Justice to become tax exempt or else cease their activities. To continue the search on cooperatives, I visited the Directorate of Agricultural Cooperatives, the main bureau under MAIL in charge of cooperatives in Afghanistan, in April 2018. The official I met confirmed what I had been told by the previous MAIL staff, also adding that no new cooperatives had been registered in Kabul based on the revised law, and that in case I wished to visit other provinces to investigate cooperatives, a formal letter was needed from the head of the Directorate to present to provincial directors of the Directorate. Simply walking in would not do, I was told. Following a 10-day procedure (to give an idea of the time period needed for fulfilling simple steps), three letters addressed to the provincial Directorates of Balkh, Baghlan and Herat provinces were approved. The letters were in case I had to expand the research to these relatively secure and economically significant provinces should I maintain the original research RQs.5 I flew to Mazar-I Sharif, capital of Balkh province, in July 2018 to explore expanding the research’s geographic scope because preliminary data showed that the province had witnessed the highest number of new cooperatives based on the new cooperative law. However, the head of the 5  Based on a 2015 UN Habitat report on Afghanistan’s cities (UN Habitat, 2015), Herat and Balkh came second and third after Kabul among Afghanistan’s provinces in many of the report’s indices, including the contribution to the national budget from their provincial earnings, which can be taken as one indication of their importance in the national economy.

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provincial Directorate of Agricultural Cooperatives in Balkh told me that new cooperatives were, in their activities and the way they ran their business, the same as before: they operated as farmers’ associations and had merely changed their status on paper. Newly established cooperatives were also all in the primary sector and did not meet the criteria for research case selection, and they were also mostly located in insecure districts (Chimtal and Balkh6). I also interviewed an employee (also a friend) of an international company that implemented USAID projects for business development in six northern provinces, focusing—by coincidence—on agricultural cooperatives. He had conducted research on all the cooperatives that had been financially assisted by USAID.  The interview with him revealed cooperative financing, their business model and governance structure, reaffirming what the head of the provincial Directorate had said about the lack of substantial change in how cooperatives were run. This trip was decisive in re-orienting the research thereon, at which point the initial RQs were re-evaluated. Parallel to these steps, I had already begun making calls to private sector investors in Kabul to set up interviews. Related to SOEs, I visited the head of the General  Directorate of Industries at MoIC and was told that the few SOEs that remained under MoIC’s supervision were all inactive. The Directorate did not have information on SOEs under other sectoral ministries (e.g. cement production falls under the Ministry of Mining, sugar under MAIL, printing presses under the Ministry of Culture and MoIC). Multiple visits to the important Directorate of Public Enterprises under the Ministry of Finance in April 2018 resulted in accessing a report that was already available online. The Directorate received all SOE reports under different sectoral ministries. On 7 May 2018 (nearly two and a half months after entry into the field), I met the Chief Executive Officer of the Afghanistan Industrial Association (AIA), through whom I secured contact details of a number of AIA members (manufacturing sector producers). According to the AIA Chief Executive, between 200 and 250 production units were located in the main Kabul industrial park (IP), which were also AIA members. The contact details of all of them were not available because most of them (the list of contacts shared with me included 26 names) often did not visit the AIA office and did so when they confronted a procedural difficulty for which they needed AIA’s support. On 19 July 2018, through the help of the AIA Chief Executive, I attended a meeting of the Afghanistan Steel 6

 A district in Balkh province is also called Balkh.

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Association and obtained contact details of its 13 members, of whom five later agreed to participate in the study. Around mid-July 2018, I visited the Directorate of Revenue at the Ministry of Finance—pre-arranged7 by a friend—to explore whether information regarding revenues from different sectors, economic or otherwise, could be accessed—as a measure of the weight of different sectors in the economy for macro-level information. I was given access to data regarding sectoral distribution of revenue collected through taxes and tariffs in the past 10 years. The person in charge also discussed the frequent meetings—four to five per annum—with the IMF officials stationed in the country regarding Afghanistan’s economic policies and inclusion of IMF recommendations in the country’s fiscal policies. In mid-August 2018, I visited the other, relatively smaller, IP in Kabul and met its president, who provided contact details of 33 members from a total of 36 (three were inactive). The IP was rented out by a private investor, located inside a gated compound—unlike the main Kabul IP, spread over a much larger neighbourhood with the units arranged side by side as in any regular residential neighbourhood in Kabul. I found the smaller IP by accident—a participant who had been contacted by phone happened to be located in this IP. Lastly, for data access, I wrote to a Kabul-based foreign NGO in September 2018—which I heard about through social contacts—which had been active in rehabilitating traditional handicrafts in Afghanistan, covering 36 small production units. I interviewed one of the directors of the NGO and was given access to one of the producers, a jewellery producer located near the vicinity of the NGO’s headquarters.

5.5   Case Selection The four criteria for recruiting participants were that (a) they fitted the UN economic classification category (UN, 2008), that is, they were secondary sector units—the term ‘secondary sector’ denotes the activities under Section C of the United Nations’ International Standard Industrial Classification of All Economic Activities (ISIC) Rev. 4 (UN, 2008); 7  To reiterate, simply walking into a government office in Kabul, even with a university letter confirming research student status, is time-consuming and often in vain because bureaucratic or regulatory approval of such a letter may not exist or the functionary receiving it might simply choose not to cooperate. Taking such formalities seriously was mostly secondary to and much less influential than a personal link.

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(b) they were physically located in Kabul or maintained the majority of their sales operations in the city; (c) they were established or relocated to Afghanistan and registered between 2002 and 2018 and (d) the unit had a minimum five members, including the owner, members of the management team and workers. Those only working inside the unit were included under the category “worker” (excluding the unknown number of marketing and sales agents). In reference to the unit of analysis in the study, I refer to them predominantly as “production unit” (or “unit” for short), designating a single production entity located in a geographic premise, and equipped with assets to operate in a self-sustaining manner. A company, on the other hand, comprised one or many units in a single location or in various locations. Keeping the case selection criteria in mind, I applied both simple random sampling and stratified random sampling for recruiting participants— the latter for cases in industrial parks (IPs). For simple random sampling, any unit based on the above criteria could be recruited for the study without pre-designed preference based on industry, gender, education level, specific location inside Kabul and other such properties. Both of the above methods were used based on their utility as non-biased sampling methods. Random sampling also allowed for recruiting as many participants as possible, which was useful particularly because recruiting participants was highly challenging. Some of the reasons for the difficulty in recruiting participants in the context are discussed in Sect. 5.8. of this chapter. I approached 213 potential participants through phone calls. This is excluding other calls, personal visits, emails and communication to establish needed contact to prepare for other aspects of the fieldwork. Phone calls were the most efficient way to contact potential participants because use of other communication tools (e.g. emails, fax or letters) was not common in the context or was difficult to rely on. Participant recruitment for the study happened through the contact information from the sources described above. Of the estimated 200 to 2508 units located in Kabul’s main IP (see Fig. 5.1 for location), 27 were investigated, and of the 33 units in the smaller IP (see Fig. 5.2 for location) I researched four. In three cases, the locations of the production units were in Parwan, Kapisa and Baghlan provinces (see Fig.  5.3 for location relative to Kabul), but the company headquarters were in Kabul. The remaining 17 units were 8  The exact number was not known to the head of the Afghanistan Industrial Association (MKAAIA070518) due to irregularity of contact between it and its members.

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Fig. 5.1  Main IP in Kabul. (Source: Google Maps)

Fig. 5.2  Bagrami IP. (Source: Google Maps)

located outside IPs and scattered in different locations in Kabul city. The research on aggregate investigated 53 companies (most of them comprising single unit), among which two did not meet the second and third criteria and were removed from the analysis. The interviews were taken in “semi-natural” settings (see Blaikie, 2004, p. 28), that is, participants were not actively performing their routine and had to set aside some time for

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Fig. 5.3  Locations of Baghlan, Parwan and Kapisa provinces relative to Kabul. (Source: Google Maps)

the interview, but in most cases, they were not required to leave the production unit or their company headquarters. Although representativeness of the study sample was not a concern due to the in-depth qualitative nature of the research, some important points to this effect should be mentioned. From the 51 units in the research, 40 (78.4 per cent) were members of an inter-sectoral or inter-industrial collective where investors gathered to discuss common issues and difficulties and devise collective strategies, including consolidating their ‘bargaining’ power when meeting with government agencies and NGOs for negotiations to push for supportive policies. The opinions given by these regarding the conditions in the environment (discussed in Chap. 7—including insecurity, international and national competition, domestic sales habits, access to credit, etc.) can be considered as reflecting a general picture. Of the above 40, more than half (24 units) were members of a sector-wide association, seven were members of a sector-wide association but also had membership in an industrial cluster,9 seven were members of an industrial 9  Units from the same industry (e.g. plasticware, cement poles, electrical wire) forming an inter-industry support group. This was different than sector-wide associations that could include members from all kinds of manufacturing activities and were not exclusive based on industry.

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cluster only, and two were members of a gender-based sector-wide association—specializing in promoting women’s entrepreneurship. From the 40, seven had leadership positions in their sectoral associations or industrial clusters. Moreover, regarding the relatively most capital-intensive industry in Kabul, iron smelting and rod production, from the 13 members of the Afghanistan Steel Association, five were researched (all these units were also in the Main IP in Kabul). Of the 23 members of the association of producers of electricity-related items (panel boards, cement poles, electrical wire), seven were researched. Furthermore, the choice of simple random sampling helped in recruiting participants from a diverse set of industries (Table 5.1). Variation in the industries did not interfere with answering the RQs, and in most cases, interviews were taken at the same time as the visit to the production site, usually the participant her/himself giving the tour and explaining the different production stations. A maximum of three interviews could be taken in one day, but often one was taken due to myriad logistical issues—discussed in detail below. Following the pilot stage, the study population was narrowed down to the owners of private sector investments in the secondary sector. In four cases where the investors were not present, the interview was taken with superintendents who had decision-­making authority. As mentioned above, field notes from production sites were used to break down the units based on machine use—this was used to analyse asset specificity in Chap. 7, Sect. 7.1.1. In terms of sophistication of machines, Table 5.1  Industries in the research Food

Iron melting and iron rods

Pharmaceuticals

Cement poles

Panel board (metal box, switchboard, etc.)

Detergents

Cold drinks

PVC pipes

Electrical wire

Plastic shoes and Sandals

Handicrafts (clothes and jewellery)

Hygiene products (pampers and tampons)

Tissue paper

Gas cylinder

Plasticware

Printing press

Sanitary system (fittings, taps and pipes)

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the units researched in the study can be classified into four categories based on (a) the steps the machine performed that were automatically linked to each other and (b) non-involvement of human manual input: • Category 1: In these units, automation was not involved, and separate machines were operated by human hand. Machines, on their own, did not perform any transformation of the raw material based on its internal design. This means that steam and electricity—operating the machinery based on the principle of continuous rotary motion (see Bresnahan and Trajtenberg, 1995)—were not used in these units. These include artisanal secondary food processing,10 handicrafts,11 gas cylinders12 and toilet sanitary fittings.13 Human hand carried the raw material, shaped it using manually operated tools, handled the output, and packaged and stored it in the warehouse. Human hand moved the input and output between stations. In this category there was no great variation between different units. Except for HMKM-P and NUHM-P, which relied on numerous purpose-built machineries and were closer to electricity panel board units in the complexity of their machinery use, they did not utilize any in-built automation in the machine to transform the raw material, relying entirely on human hand to operate all the production tools. • Category 2: In this category, the main machinery or multiple separate machines consumed electricity to operate. Each machine, based on in-built capacity, performed one step to transform the raw material into a finished good or prepare it for assembly. These separate steps were not linked to each other through in-built automation and each machine operated as an independent component. These included units producing electricity panel board,14 cement poles,15 detergents,16

 ABNM-P; HM-U; MMF-P; MSM-P; NMF-P; RHF-P; ZKF-P.  FBF-P; MAM-P; NGF-P. 12  HMKM-P. 13  NUHM-P. 14  AAM-P; HSSM-P; BAM-P; MAAM-P; NM-P. 15  AM-P27; MM-P. 16  AM-P18; MWQM-P; NAAM-P; SNMM-P. 10 11

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plastic shoes and sandals,17 plasticware,18 printing presses,19 and secondary food processing.20 In these units, transporting the raw material, feeding it into the machine, supervising the machine during the single-step production process, and packaging the finished good were done by human hand. • Category 3: These units relied on machines which performed two to three steps. These steps were linked to each other; either the machine automatically carried the material based on an initial programme or a human intervened in each step to input the command. Before and after these steps, production was dependent on human hand to carry and feed the raw material, input the commands (temperature and the specifications of the product), supervise the machines during the steps it took to produce the finished good, and package and transport the output to a warehouse or to the client. This included units producing iron melting and rods,21 PVC pipes22 and electrical wire.23 In one outlier unit, which produced pharmaceutical products,24 categories two and three were both used. For producing some products (ointments) the machine added one step, the subsequent steps being handled by human hand, while other products (such as cough syrup) used machines that performed more than one step. • Category 4: In these units, the machine in use performed more than three steps that were automatically inter-linked. This included units producing cold drinks,25 female hygiene products,26 detergent,27 secondary food processing28 and tissue paper.29 In these units, a larger variation between the units existed in terms of human labour involve-

 BM-P.  HRKM-P; HSM-P; NSM-P; QYM-P. 19  DAAM-P; MTM-P; MZM-P15. 20  ABM-P; MZM-P23; SNM-P. 21  AGHM-P; NNM-P; PKZM-P; ZMM-P. 22  BAKM-P; DMYM-P; HSMM-P. 23  BHM-P; JKM-P. 24  AMPM-P. 25  ARHM-P. 26  FM-P. 27  MSSM-P. 28  JM-P; GZAM-U. 29  HKGM-P. 17 18

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ment. In ARHM-P, JM-P, GZAM-U and MSSM-P machines played the main role in carrying the raw material to the production station where multiple steps led to the finished good that was also packaged by machines. In regard to HKGM-P (tissue paper) and FM-P (female hygiene products) there was more involvement of human hand in the packaging process and the distance between the raw material and the finished good required fewer steps compared to the above four.

5.6   Thematic Analysis The themes identified in the data through a first reading and coding process were the AIEs that were discussed in Chap. 3, Sect. 3.6. Through an application of qualitative thematic analysis, lay language was coded, and the themes were developed based on them, which were subsequently integrated into abstract concepts to provide theoretical coherence using Norman Blaikie’s Approaches to Social Enquiry (Blaikie, 2011). I also used the guidelines explained in Guist et al. (2012) and attended a University College London Doctoral Skills Development Programme on thematic analysis in the first doctoral year. The analysis period began with transcribing and coding the interviews after leaving the field. Transcription was done in the original language— Persian—using Express Scribe Transcription Software. I transcribed all 52 interviews with private sector investors and six interviews with relevant officials. Two interviews in the latter category were not recorded30 and did not require transcription. Transcription of all the interviews—except the ones that had been used for the pilot stage—began after returning to London. I transcribed them myself due to reasons of method, efficiency and finance. Considering the issue of method, transcription of interviews taken in Persian had to be done in the original language considering that the thematic analysis depended on patterns in the original language. Moreover, I did not recruit any paid assistance for this because of the analytic merit in transcribing the interviews myself. Many of the patterns in the data that were subsequently used as the basis for coding were revealed while doing the transcriptions. In terms of efficiency, I could not entrust 30  In one case, the interview took place inside the Presidential palace with an official of the President’s High Economic Council for which no electronics were allowed. The other interview took place in an impromptu manner, for which I did not have my recorder and took notes.

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the important work of transcribing the interviews to a paid transcriber considering the legitimate doubts I had concerning the inadequacies of a paid transcription service in London for Persian, which would require a reworking of the transcription to remove these inadequacies later on. I preferred to transcribe the interviews personally to avoid both the efficiency concerns and the time-delay that such an exercise might entail. From a financial standpoint, the charges of a transcription service were avoided by doing the task myself. My previous professional experience as a transcriber working on and off for an Australia-based company during 2010, 2011, and 2012 also proved helpful. For coding, the book The Coding Manual for Qualitative Researchers by Johnny Saldana (2013) was used as a guide. I received instruction for using the coding software Nvivo during the first year of my PhD in a University College London Doctoral Skills Development Programme and after returning from the field, I followed refresher courses online (e.g. YouTube videos by the Nvivo software developer QSR). The coding process began after all the transcriptions were finished merely out of respecting a work sequence, resulting in 32 codes or ‘nodes’ (refer to Table A4 for a drawdown of all the nodes). From the above, 67 sub-codes or ‘child nodes’ developed. Not all the codes were used in the analysis due to issues of scope. The decision regarding the relevance of codes was made as the analysis proceeded, keeping in mind the coherence and inter-related parts of the data that complemented each other for answering the RQs. Different themes under different codes were cross-referenced in the analysis. Due to format incompatibility with Persian text on Nvivo (it disturbed the right-to-left alignment of sentences), all MS Word documents were converted to PDF.  This posed the difficulty of coding the text in bulk without being able to code words, which deprived the process of the facility to use Nvivo for finding word frequencies and other capabilities of the software. The software was therefore mainly used to identify themes, mark them, and have access to all the interviews by keeping them in one file. It also helped in making notes and marking other interviewee specifications (e.g. the industry, number of workers, number of years, estimated value of assets). Each interview was coded separately considering that pattern identification in the data was based on individual experiential accounts. Not all of the parent codes or nodes emerged with one interview even though the transcription process did point towards emergent patterns. However, with the introduction of every new parent code, previously coded interviews were re-coded to avoid excluding data.

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5.6.1   Note on Language, Referencing and Numbers Persian words, although important in grasping the colloquially specific nuances of participant accounts, were not directly used for constructing codes. Linguistic symbols were only instruments for arriving at relatively coherent themes. In the book, wherever colloquial terms were used to arrive at contextual specificities and meanings, this has been mentioned in the analysis. Text inside brackets [] by me is also meant to reduce the confusion that a verbatim translation might have led to for the reader. Moreover, all Persian words were transliterated, written in italic font to establish a distinction from English text. In most cases, the English term is written inside quotation marks followed by the italicized original word in Persian written inside parentheses. For example, the word challenge has been written as “challenge” (janjaal or moshkelaat). Regarding the original words for which rough equivalents exist in English, some explanation has been added inside parentheses following the transliteration. For example, the word showqi does not have an exact equivalent in English and can mean passionate, eager, risk-taker, oblivious, lover, frivolous, reckless, interested, gambler and profligate based on the social usage of the term in Kabul’s society (the word is derived from the Perso-Arabic root showq, which also has various meanings surrounding the notion of desire and strong enthusiasm31). Such words were translated to their nearest equivalent, followed by a brief description to add the socially common nuances absent in the English equivalent. In view of the fact that translation could not be used for the analysis in the same way, depriving the research of direct access to the language the participants used in their answers, none of the interviews were translated. I am, in addition, fluent in reading, writing and understanding Persian as my native language and have received formal education in it. The initial letters in the code used to designate a company are arbitrarily assigned without a particular logic to ensure utmost anonymity, followed by gender (‘M’ for male, ‘F’ for female) to give an idea of the differences along gender lines. Next to “-” the letter ‘P’ indicates “Private” and ‘U’, “Union” (U has also been used for “Association”). This is maintained in all instances except AM-P18, AM-P27, MZM-P15 and MZM-­ P23, which have numerical signs to distinguish them. In the text, the code has been mentioned with the product associated with that particular  Based on Loghatnaam’e Deh’Khuda Persian Dictionary.

31

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company written inside parentheses. For example, with regard to JM-P (cooking oil), ‘J’ is the arbitrary letter, ‘M’ is the participant’s gender, and ‘P’ shows that the company was owned privately, and lastly, ‘cooking oil’ inside the parenthesis denotes the industry. Sometimes this order is reversed: the industry is mentioned first, and the company code is mentioned inside parentheses, for example ‘electricity panel boards (AAM-P)’. When the industry is irrelevant in the thematic discussion in any section of the book, mention of it has been avoided for reasons of brevity. Words, phrases, sentences or paragraphs inside quotation marks in the analysis section are direct translations of participants’ words from the original language. As such, any arguments, assertions, points, hints or insinuations mentioned inside quotations that do not build towards a coherent argument in a section should be understood as merely in the assistance of the general argument that the research makes in that particular section—not as claims made by the research. Some other editorial points need mentioning. The book has followed ‘Sage Harvard’ in-text citation and bibliography style. For non-integer numbers, decimals were rounded up after the first digit after the separator. For example, 9.356 has been rounded up to 9.4. All monetary values were converted to their US dollar value for ease of comprehension, for which the sign “$” has been used before the figure, followed by “k” for thousand, “m” for million and “bn” for billion without a space. Afghani amounts were exchanged for their dollar amount using the online currency converter freecurrencyrates.com. To avoid reflecting the day-to-day exchange rate alterations from the afghani to the dollar, an average between the highest (Afs. 75.7 = $1) and the lowest (Afs. 68.5 = $1) of the exchange rate in 2018, equalling Afs.72 = $1, was used in the analysis. Regarding dates, the ‘dd/mm/yyyy’ format has been used throughout the book.

5.7   Note on Positionality Assuming that ‘absolute’ objectivity (however this is interpreted) is beyond the reach of a human researcher, more so when some emotional investment is involved in the case being studied, and if all other biases built into the researcher’s constitution are somehow tamed and kept in check, the bias transmitted through the use of language itself being a problem that has busied logicians and philosophers in recent history, I nonetheless strove to gather as complete a set of empirical data as possible, with the

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means at my disposal. This was to provide an approximation of an ‘objective’ view in the usual sense of acting ‘unbiased’ and ‘fair’. Nonetheless, my education, both formal and autodidactic, in heterodox political economy has had a significant role in directing my intellectual and research interests, including this one. For choice of topic, my interest and curiosity were supplemented by my lived experience in Kabul during various stages of my life. These reasons notwithstanding, I remained committed to data patterns, a stage in the analysis during which I set aside the intrusions of personal judgement to bolster a regularity-based grasp of the themes in the data. The analysis of this regularity and its interpretation, on the other hand, is a factor of the researcher’s informed gaze, her/his personal history, her/his ethical and social commitments (albeit indirectly through providing academic input for use in policy), and the language (s) he uses and other such factors—in short, the researcher’s habitus, which I fully own. The data collection process was strictly inductive based on the four heuristic parameters. I relied only on participant accounts to subsequently plug them into the conceptual themes that represent the data regularities. The discovery of the underlying mechanism at work through the experiences of the participants is constructed by using their own experiential account. The inductive strategy of data collection has not been tampered by a priori theoretical considerations. In the explanation of the regularities, on the other hand, I adopted a retroductive strategy for which I relied on a conceptual model developed through the application of the AIEs and the Bourdieusian framework. Moreover, in the field, my coming from abroad (the United Kingdom) formed one important component of my introductory presentation to the people I met and to whom I introduced myself as “a PhD student studying manufacturing activities in Kabul, coming from a University in London, United Kingdom”, a habit I maintained consistently during the preparatory stages of interviewing officials and asking them for vital data, during the pilot stage and subsequently during the entirety of the data collection process. I cannot generalize what impression this might have had on these encounters, but this ideational item cannot be discarded, as I made it explicit in each meeting that was research related. The normative elements of building the model of a patriarchal family in Afghanistan relied on literature (most importantly the Quran as Islam’s most sacred text), but the conception of it is not devoid of my own first-­ hand observations as a member of Afghan society. I was born into and

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raised in an Afghan family and left its confines at the age of 18, and I have not returned in the sense of being a physically present permanent member but have paid occasional visits. This has provided me with an intimate knowledge of the Afghan family structure, a structure that remains mostly obscure to outsiders apart from a few cultural tropes that generalize the entirety of the Afghan society. Though not scientific-observational (hardly anyone goes through life with a social scientist’s gaze), the tacit knowledge derived in this way was significant in my understanding of this social unit—the Afghan family as an ideal type and in regard to the AIEs that were relevant to my research.

5.8   Note on Ethical and Logistical Issues All participants were handed a translated consent form and information sheet upon arrival at the meeting place, were given adequate time to read them, and signed the consent form either before or after the interview. They were assured in writing and verbally that their participation was voluntary and could be withdrawn at any point. I clarified and explained the consent form and information sheet if requested. Apart from these procedures, I did not acquire any additional documentation or letter from an official authority for the interviews or for visiting the production facilities, given that the main persons who had such authority (the investors) were being interviewed, who were well-positioned to provide the data and give permission to visit the production site. Government research ethics or a bureaucratic agency granting research licences did not yet exist in Afghanistan, to my knowledge. I did not hire a research assistant and all the interview appointments, field visits, storage of interview records, re-evaluation of the research tool, transcriptions and other logistical matters were handled by me. Participation in the research was non-pecuniary and did not involve any other quid pro quo. I pledged to share a copy of my final work upon the participant’s request if made in future (my email address was shared in the information sheet should the participant wish to maintain contact in this and in any other form related to her/his participation). My early observations during the pilot stage highlighted strong ambivalence or reluctance by some prospective participants (i.e. an investor who had tentatively agreed to participate in the research, but the timing was still in future and not fixed) to take part in the research due to the pre-­ interview protocols and air of formality. The first participant, recruited

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through a friend, informed me that his willingness to participate and, most importantly, to trust me, was because of the friend’s tacit guarantees, suggesting that other investors were unlikely to do the same as they were often reluctant to share too much detail because of worries concerning replication of their activities by a rival producer—I could be the informant of another producer. I encountered 11 failed interview attempts: interviews that were agreed upon, towards which preparations were made, such as travelling to the interview site, but the interviewee changed their mind. Reasons for this varied, including unwillingness to give details and only willing to provide generic information (which cancelled out the purpose of the interview for answering the RQs), going through the information sheet and refusing to sit for the interview afterwards, sheer reluctance to participate without giving any reason, and other unforeseen events in the city that made commuting impossible. The formality involved in presenting the consent form and information sheet and requiring a signature was seen to make a prospective participant doubt whether the research really was what I said it was and not some other binding scheme disguised as research. This was a challenge especially with those prospective participants who were not sufficiently literate to go through the information sheet and reassure themselves (I wrote a report pointing out the issue with the formality of research, which I sent on 24 September 2018 to the UCL Research Ethics Administration). Minimal requirements of empirical research, for either qualitative or quantitative data, were mostly not present in the context due to the novelty of the institutional preconditions of such an academic undertaking. This shortfall could be exacerbated by any or all of the psychological and physical impacts of four decades of war, including: (a) investor weariness to share anything beyond a 30- minute to one-hour interview, that too after cautious entreaties and numerous coordination hurdles in a place like Kabul; (b) novelty of the term “scientific research” (tahqiq’e elmi) in the context among the target group and the legitimate concerns this word’s association might cause—tahqiq is more commonly used in the context of “legal prosecution” (tahqiq’e qazaayi) or a “criminal investigation” (tahqiq’e jormi); (c) suspicion among private sector investors out of a competitive urge to safeguard their investment from external encroachment, state tax agents or domestic or regional intelligence agents, a feeling that can be reinforced by the effects of the securitized socio-psychological environment of war and siege mentality; and (d) the weakening of communitarian commitment and the personal disposition to help another

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while dealing with the situational burdens of running a business in Kabul, among others. Method options were severely limited, therefore, to either the account the investor her/himself gave during the interview (which is highly subject to human cognitive fallibility, if not outright deception) or reliance on abstract international and national statistics in case of macro-­ level studies which were very difficult to corroborate—this did not concern me as I did not wish to undertake a macro-level study. In terms of logistics, I commuted to all the appointment locations by personal vehicle or hired taxi. Pre-planning for arranging the timing of interviews could not be maintained in most cases because of logistical issues. One important hurdle had to do with traffic, with some roads getting temporarily blocked due to security reasons, which made pre-­ arrangement unreliable. To remedy this, prospective participants were told in the initial call to expect a confirmation call on the day of the interview. This was also to double check whether the participant was still willing to sit for the interview and had available time, considering that conditions could change during the interval between making the first call and the date and time of the interview. This was a recurring problem in Kabul where timekeeping and prior commitments of this sort proved quite loose and unreliable. Therefore, a prospective participant had to be called several times, especially an hour before the interview. Arranging to call prior to the interview time also worked as a reassurance for the prospective participant that I had not forgotten our rendezvous. This may again have to do with the fact that timekeeping and precise daily schedules were not common in the context (or trusted due to the high degree of unpredictability of future conditions) and calling prior to the interview displayed my intent that I was still committed to the previous interview arrangement. Otherwise, showing up even on time based on a pre-arranged appointment without the pre-interview call could amount to taking a big chance. This was because reneging on a meeting promise was not declared outright most often, one sign of reneging being not following up by making that pre-interview call—at which point the prospective participant could assume I was on my way to the interview site and might consider the interview cancelled. All of this was if they still remembered me, which was another reason why I called to re-introduce myself (and, in some cases, re-recruit them with the reminder). Finding the right address was another time-consuming hurdle due to Kabul not having an identifying municipal system for streets, roads, houses and postal codes. Searching a location had to be done based on detailed

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instructions about important landmarks surrounding the destination and other such details (e.g. a large tree, a nearby shop, a sharp turn of the road). This also required frequent on-the-way phone calls to make sure the route taken was the right one.

References Babbie, E. (2013). The practice of social research (13th ed.). Wadsworth Publishing Company. Blaikie, N. (2004). Designing social research. Polity Press. Blaikie, N. (2011). Approaches to social enquiry. Polity Press. Bourdieu, P. (2000). Making the economic habitus. Ethnography, 1(1), 17–41. Bresnahan, T.  F., and Tarjtenberg, M. (1995). General purpose technologies: Engines of growth? Journal of Econometrics, 65(1), 83–108. Creswell, J. (2014). Research design: Qualitative, quantitative and mixed methods approach (4th ed.). Sage Publications. Grenfell, M. (2008). Introduction. In M.  Grenfell (Ed.), Pierre Bourdieu; Key concepts. Stocksfield. Guist, G., McQueen, K., and Namey, E. (2012). Applied thematic analysis. SAGE Publications Ltd. Harvey, L. (2012). Social research glossary. Quality Research International. Retrieved April 1, 2017, from http://www.qualityresearchinternational.com/ socialresearch/ Kipfer, S. (2009). Preface. In H.  Lefebvre (Ed.), Dialectical materialism. University of Minnesota Press. Leedy, P. D., and Ormrod, J. E. (2000). Practical research: Planning and design (7th ed.). Pearsons. Legard, R., Keegan, J., and Ward, K. (2003). In-depth interviews. In J. Ritchie & J. Lewis (Eds.), Qualitative research practice. Sage Publications. Markie, P. (2017). Rationalism vs. empiricism. In: E. N. Zalta (Ed.), The Stanford encyclopedia of philosophy. Retrieved May 4, 2018, from https://plato.stanford. edu/archives/fall2017/entries/rationalism-­empiricism Marx, K., and Engels, F. (1998). The German ideology. Prometheus Books. May, T. (2011). Social research: Issues, methods and process (4th ed.). Open University Press. Mittereder, F., Durow, J., West, B.  T., Kreuter, F., & Conrad, F.  G. (2018). Interviewer—Respondent interactions in conversational and standardized interviewing. Field Methods, 30(1), 3–21. Saldana, J. (2013). The coding manual for qualitative researchers. SAGE Publications Ltd.

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United Nations. (2008). International standard industrial classification of all economic activities, Rev. 4, Statistical papers, Series M No. 4, Rev. 4. United Nations Habitat. (2015). State of Afghan cities report 2015 (Volume-I English). Retrieved June 4, 2017, from https://unhabitat.org/books/ soac2015/ Wacquant, L. (1992). Toward a social praxeology: The structure and logic of Bourdieu’s sociology. In P. Bourdieu and L. Wacquant (Eds.), An invitation to reflexive sociology. Polity Press.

CHAPTER 6

Data Analysis: Habitus and Practical Knowledge of Production

This chapter attempts to answer the first RQ and advance the book’s argument, namely the structuring effect of habitus regulated by AIEs that led to the investment of private capital in manufacturing activities among the cases in the research. The aim here is to highlight the socially contingent nature of the practical knowledge of manufacturing, a knowledge limited in the context due to the sector’s novelty for private investments (see Chap. 1, Sect. 1.6, for details). The implication the book derives from this sparsity of practical knowledge is that materially the manufacturing sector did not retain a structurally significant role. The AIEs as micro-analytic institutional tools were applied for explaining the underlying mechanisms at work for inducing the initial decision to invest. This chapter then relates the findings for the first qualitative proxy of significance (QPS—see Chap. 1, Sect. 1.3., for details), namely, horizontal mobility of capital (for elaboration, see Chap. 1, Sect. 1.3). The strategy for the analysis of data, as explained in Chap. 5 (Sect. 5.6.), was guided by approaching the raw data sans a priori theoretical assumption, seeking to find patterns in the data. Part of the data for this RQ was based on directly asking the participant to provide a narrative history of what induced their decision to invest in the secondary sector and why this sector and not another one. The other way this information was collected was through the un-prompted accounts given by the participant prior to the place in the interview of the aforementioned question (which was rendered redundant). The AIEs I applied in this chapter were the © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 K. Rafi, Patriarchal Hierarchy, https://doi.org/10.1007/978-3-030-98407-6_6

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following: (1) obeisance; role emulation; perpetuation; (2) trust and non-­ pecuniary, non-committal and non-reciprocal social relationship (the three N mechanism hereafter); and (3) responsibility towards homeland and communitarian norm. These AIEs of habitus conditioned the initial decision to enter the manufacturing sector in majority of the cases investigated. The institution of ‘market’ at some level of information-gathering has been seen as significant—such cases being rare. I should emphasize that the initial inducement points to the structuring effect of habitus conditioning the ‘livelihood strategy’ in the form of investments in manufacturing, not what this livelihood strategy was meant to achieve, which is self-evident: to generate ‘economic’ profit. It can be argued that ‘economic’ profit is adequate to explain both the initial inducement structuring the investment decision and what it was meant to achieve subsequently. However, ‘economic’ profit is an inadequate reasoning for why, out of all the profitable activities, the secondary sector was chosen for the investment and, even more, why a particular industry in the secondary sector. Particularly when, as will be discussed in Chap. 7, Sect. 7.2.2, information regarding the present or future prospects of the industry in which they intended to invest was unavailable to the investors at the point of registering their business. In addition, not all individuals in a society who are interested in ‘economic’ profit (anyone working in a remunerative profession) can and do end up investing in the secondary sector. Given these factors, ‘economic’ profit should be seen as not the initial inducement behind these investments but merely their outcome. Hence, the initial inducement denotes the structuring effects of the socially contingent practical knowledge of the profession of manufacturing. A complex decision-making process was witnessed whereby multiple AIEs were involved in inducing the investment decision, complementing each other and in combination having conditioned the decision. Some AIEs foreground an objective life trajectory, a life-history and practical exposure, underscoring the habitus’ development in the professional domain (e.g. “I invested in this because my family has been in this trade for generations”), while other AIEs stress a personal and subjective (or aspirational) interest of the investor (e.g. “I invested in production because this is my country and I want to serve my country and its people”). Dividing these into objective and subjective/aspirational, I conceded the former more weight because they were less likely to be based on an ex-post sentiment, while subjective-aspirational interests were ex post. That is, a person feeling a certain way towards a profession only because they spent

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many years doing it, inclined to also retroactively cite their present subjective experience to explain why they made the investment decision in the first place. Aspirations can also be a common normative determinant among larger members of a society, but not in all of them will this factor lead to an investment in manufacturing activities—it is difficult to discern a clear link between the two.

6.1   Habitus Structuring Investment Decision It bears mentioning that in Bourdieu’s theorization, habitus works: …as a system of dispositions, that is, of virtualities, potentialities, eventualities—only in reference to definite situation. It is only in the relation [emphasis in original] to certain structures that habitus produces given discourses or practices. (Bourdieu and Wacquant, 1992, p. 135)

Therefore, seeing a direct transfer of a father’s profession to the son as a structuring effect of the latter’s habitus would be a misreading of the concept, as too “mechanical”. The correct way to see habitus, Bourdieu argues, is to accept the possibility that from the disposition produced in the family environment any number of decisions can spring up. What determined or regulated the decision by investor habitus in Kabul that led to a preference for manufacturing over other alternatives was implicit embodied institutions that governed their decision. These institutions originate in the ‘mega-structure’ family hierarchy (see Chap. 3, Sect. 3.5, for details). Among the cases investigated, the structuring effects of habitus were observed through the following AIEs. 6.1.1  Obeisance, Emulation and Perpetuation In over three-fifths of the cases (64.7 per cent)1 ‘obeisance, emulation and perpetuation’ was the most significant factor as the AIE structuring the investment decision. Combined, the two objective factors ‘6.1.1.’ and ‘6.1.2.’ (below in this chapter) explicitly relayed the practical knowledge of 1  ABM-P; DAAM-P; MTM-P; AMPM-P; AM-P27; BAKM-P; BM-P; JM-P; MSSM-P; MEWM-P; ZMM-P; FBF- P; HSM-P; HSSM-P; PKZM-P; DMYM-P; MM-P; NSM-P; HSMM-P; BAM-P; BHM-P; MAAM-P; NM-P; GZAM- U; SNM-P; NUHM-P; NGF-P; QYM-P; ZKF-P; MAM-P; MMF-P; RHF-P.

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manufacturing to nearly four-fifths (80.4 per cent)2 of the cases in the research. Moreover, this factor and factor ‘6.1.3.’ (below in this chapter) were stated by an overwhelming majority (94 per cent), from which 36.2 per cent3 overlapped; the initial inducements in these cases were structured by both ‘6.1.1.’ and ‘6.1.3.’. In 34.6 per cent4 of the combined cases, only ‘6.1.1.’ was observed as the dominant structuring factor. There was only one case5 that overlapped between the three structuring effects. By obeisance as an AIE I refer to a non-inquisitive compliant disposition that is inculcated within the family environment. Emulation and perpetuation follow similar logics, except that in the case of emulation it is a direct copying act of the authority figure’s profession by another family member—as an ‘heir apparent’—whereas, in regard to perpetuation the attempt is to follow the professional heritage of the family by embracing it as one’s own. I should note that the outcome from all these three accrued in terms of the ‘economic’ profit through production and exchange, but also through symbolic capital. The act of investment based on the above AIEs was legitimated by investors by ascribing it a symbolic importance with the view that it demonstrates one’s respect for the authority figure and the family heritage. The history of the authority figure as involved in a profession exposed the participant to that profession from early childhood, rendering it a familiar option for emulating.6 The participant in one case, referring to the industry in which the investment was made, spoke of it as a profession “in which we were from a long time ago”, and an investment they had made in real estate as “something temporary”. Or7 the authority figure, having worked in a field during his life, directly instructed his children to pursue a profession that would align with his career. An erstwhile university professor, facing financial hardship after migrating to Pakistan during the 2  DAAM-P;MTM-P; AMPM-P; AM-P27; BAKM-P; BM-P; JM-P; MSSM-P; MEWM-P; ZMM-P; FBF-P; HSM- P; HSSM-P; PKZM-P; DMYM-P; MM-P; NSM-P; HSMM-P; BAM-P; BHM-P; MAAM-P; NM-P; GZAM-U; SNM-P; NUHM-P; NGF-P; QYM-P; ZKF-P; MAM-P; MMF-P; RHF-P; ABNM-P; HRKM-P; NAAM-P; SNMM-P; AGHM-P; NNM-P; JKM-P; MZM-P15; MWQM-P. 3  BAKM-P; MEWM-P; ZMM-P; FBF-P; HSM-P; HSSM-P; PKZM-P; DMYM-P; NSMP; HSMM-P; BHM-P; MAAM-P; NM-P; GZAM-U; ZKF-P; MMF-P; AM-P27. 4  ABM-P; DAAM-P; MTM-P; AMPM-P; AM-P18; BM-P; JM-P; MSSM-P; MM-P; BAM-P; SNM-P; NUHM-P; NGF-P; QYM-P; MAM-P; RHF-P. 5  HSSM-P. 6  ABM-P. 7  DAAM-P.

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escalation of war in Afghanistan, instructs his sons and daughters to sell books because, to him, this line of work is socially upright compared to other options. The concern for symbolic legitimation in this case was more palpable, given that the choice of industry clearly indicates a disavowal of the only-monetary pursuit and was meant to accumulate symbolic capital as well—for a university professor who could no longer retain his home country social privileges, and was undergoing financial duress, the strategy to balance the material and the symbolic concerns could be realized through selling books, which was the strategy available to him to link a material pursuit with an intellectual one. The participant in the research, the president of the company and one of the sons of the university professor, and his siblings saw the venture (25 years old and grown into one of the largest printing press enterprises in Afghanistan) as more than its material profit-making aspect because of its emotional association with their father, who has long passed away. In a similar case of emulation,8 the decision by another owner of a printing press to enter the industry was structured by his practical knowledge of this field, growing up in a family where the authority figure worked in a state-owned printing press during most of his professional life (having retired two years prior to the date of the interview). The unit was established without any significant equity and was built up based on the father’s knowledge of the industry. The role of early socialization structuring individual habitus, hence adding the knowledge regarding professional opportunities into one’s life-experience (as observed in this case), was centred around the authority figure who symbolizes the ‘bread winner’ for the family. Information here was made available through a process of culturation, then functioning as a tool as part of a calculative strategy derived from and for use in a competitive exchange. Concern for perpetuation of the authority figure’s heritage through adopting his professional field as one’s own was observed in the case of an investor in the pharmaceutical industry,9 an interest that was shaped owing to the fact that the authority figure in this case was a doctor (a medical doctor heading a hospital during the pre-1990s civil war in Kabul). The participant’s decision to enter medical college was motivated by his interest in following in his father’s footsteps, a decision that later led to his engagement in the pharmaceutical industry, first by opening a retail 8 9

 MTM-P.  AMPM-P.

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business as a pharmacist (a profession that’s closely associated with providing medical service in Afghan society, substituting a general physician and sometimes referred to as “doctor” [daktar]) and later as an investor. Other participants having invested in producing cement poles,10 PVC pipes,11 plastic shoes and sandals12—in this case the original factory was established by the grandfather, and the investor’s elder brother, uncles and first cousins were also producing in the same industry—two detergent companies13, and two iron and rod production companies,14 their decisions were shaped based on this AIE—by directly pursuing the authority figure’s profession, specializing in his industry by continuing the same production unit, or, in rare cases, establishing their own separate company. In an outlier case,15 the authority figure role was played by the mother because of the father’s death during the civil war. The investor grew up accustomed to the subsistence strategy the mother came up with to make ends meet (producing handicrafts for sale). For the investor, this practical knowledge formed the basis for investing in a handicraft business which she owned and managed at the time. Interest in perpetuating the family professional heritage was observed in other cases16 to whom belonging to a “business family” (famill’e tujarat-­pesha) was a taken-for-granted reality, setting the orientation of their decision to enter manufacturing (as one form of business). However, the choice of sector and industry in such cases might not necessarily follow from them belonging to a business family considering that taajer and tujarat were used for most for-profit activities in Afghan society (they could invest in any other sector or industry to maintain their professional heritage). The cultural capital of belonging to a ‘business family’ nonetheless acted as an inducement for the investment per se in such cases, as well as becoming its outcome by providing it with the material basis for its continuation. Considering the few job categories in Afghan society as it remains economically undifferentiated, tujarat-pesha or taajer constitutes

 AM-P27.  BAKM-P. 12  BM-P. 13  JM-P; MSSM-P. 14  MEWM-P; ZMM-P. 15  FBF-P. 16  BAKM-P; HSM-P; HSSM-P; JM-P; MEWM-P; PKZM-P. 10 11

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a designation for tradesmen17 of well-perceived social position that was distinguished from job categories that were financially austere and physically exacting, such as farmer (dehqaani), houseworker (nokari or mazdoori, words also used pejoratively), wage labourer (shaagerdi or kargari), and lower middle-class salaried employees in the public sector (mamor’e dowlat). Hence, the investment decision in the secondary sector found its origins in a life-experience, the social position of belonging to a business family, which pre-existed the participant her/himself. This is what I mean by habitus structuring the ‘horizon of expectation’ for an individual so far as the possible professional options are concerned. The role of authority figure in other cases is played by the person at a level in the family immediately below the father—the elder brother. As with the father, the reverence and respect for the elder brother (as someone who gradually replaces the authority figure if all the legitimate criteria are embodied by him) is also learned in the family environment. In one case, obeisance was observed in how the elder brother had re-directed the professional trajectory of the individual (the research participant) who wanted to become a doctor and went to college for it but had to join his elder brother’s venture in a PVC company18—not only him but two other brothers as well—a company in which the investor was now the main leader. In such cases, the persuasive role of the elder brother on the one hand and the forbiddance or negative perception of ‘protest’ or ‘refusal’ of an authority figure’s request on the other had led to fundamental changes, potentially affecting the life-long trajectory of the individual’s professional occupation within which the investment decision can also be explained. The same applies to a cement pole factory owner,19 whose experience of working with his elder brother’s cement factory in northern Afghanistan convinced him “a hundred percent” that he should change his career plans (he was a student of architecture) and invest in his own manufacturing unit upon returning to Kabul after two years. The structuring effect of habitus played itself out by re-shaping the livelihood strategy of the investor, his pursuit of ‘self-interest’, by being physically involved with his 17  Given that the private sector in Afghanistan mainly remained confined to trade (import and export business), the distinction between tradesman and industrialist has not taken hold in society as a signifier of status and both were referred to as tujarat-pesha. Terms referring to industry, such as towleedgar or san’at-kaar, were gradually becoming common but they don’t represent a social class as commonly as taajer (businessman) does. 18  DMYM-P. 19  MM-P.

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brother’s production unit for over two years and seeing first-hand how he had “made his life”. The same structuring effect was observed in setting up a plastic bag production company20, the owner describing this by stating that he “emulated” and learned from his elder brother when he contemplated making the investment. Investment for opening another PVC pipe factory21 followed a similar trajectory. The elder brother’s ownership stakes in a PVC company in Pakistan provided the participant with the original inducement to also enter this sector. Moreover, obeisance was observed as a structuring factor in how the educational opportunities were decided by the authority figure during early childhood. A common pattern was seen among returnees from Iran22 among the cases, who, although unrelated, had all (except one) studied in vocational schools in Iran, usually having to decide the field of their specialization at age nine or earlier. They studied mechanical electronics as technical manual labour, having worked for a while in manufacturing units in Iran after graduation, all of them in apprenticeships, before deciding to move to Kabul to set up their own manufacturing units. All of them specialized in producing panel boards. These cases highlight previous life-experience that was moulded by common familial patterns: all of them being Hazaras (likely also Shi’a) and hence their choice of Iran for immigration compared to Pakistan (a Sunni-majority country). The participants’ entry into the industry of their choice was, therefore, an integral part of them becoming who they were as a person and not simply the result of a calculated investment choice. This ‘becoming’ is summarized in the view that “social world is accumulated history” (Bourdieu, 1986), and members of this world are the empirically perceptible domains where this accumulation takes occurs. This ‘becoming’ process based on embodied internalization of the practical knowledge of a profession was observed in the case of a dairy farmer,23 whose mode of symbolic legitimation consisted of still regarding himself as a ‘farmer’: “I myself am a farmer”. The dairy union—one of the largest in Kabul—was built based on the domestic knowledge of this trade, which was later modernized by procuring machines (aided by an international humanitarian agency). In a similar vein, the transition into producer  NSM-P.  HSMM-P. 22  AAM-P; BAM-P; BHM-P; MAAM-P; NM-P. 23  GZAM-U. 20 21

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(honey processing)24 followed from the participant’s pre-investment occupation in beekeeping. The investor presided over 34 honey processing associations. Viewing professional or higher education as a steppingstone towards achieving a livelihood goal at least partly originates in a hierarchy of professional roles inculcated in the family environment. In one case,25 joining the engineering college at Kabul University was shaped by the social popularity of the course, a choice that later also conditioned his investment option. Early decisions mediated through the family hierarchy regarding vocational learning26 or apprenticeship27 were witnessed as structuring reasons that later provided the informational basis for the investment, the choice of sector and the industry—given that these prior exposures entailed a formidable ‘specialization’ outcome which was later relied on to orient the investment. In two outlier cases,28 vocational education served a more immediate purpose, and the ensuing decision to invest in the secondary sector was largely accidental. 6.1.2  “Trust” and the Three N Mechanism “Trust” and the three N mechanism were the other set of AIEs regarding which the initial learning process began in the family. The social norm “trust”, that is, a form of non-inquisitive attitude towards those we know, including the information passed by them that is underpinned by this norm only (given there were no other formal or informal institutions buttressing it), and as embodied in the relationship between the investor and another individual (relative, friend or acquaintance), mainly worked as a conduit of the practical knowledge for the investment. This conduit functioned on the basis of being non-pecuniary, non-committal and non-­ reciprocal social capital, in the sense that the receiver is not assumed to pay for the information (nor does the giver give expecting an immediate compensation), the receiver is not obligated to abide by the information (although outright rejection in the face of the giver might be observed as impudence) and the receiver is not obligated to reciprocate this free  SNM-P.  NUHM-P. 26  NGF-P. 27  QYM-P; ZKF-P; MAM-P. 28  MMF-P; RHF-P. 24 25

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passage of information. This is where the logic of social capital most aptly applies, as a form of capital that is latent in group membership but can be activated to serve an ‘economic’ purpose. How this was seen in practice was that the investor was convinced, through a relationship of trust and through the three N mechanism, to put money in an investment in an industry because a relative, friend or acquaintance previously did the same—the latter often passing on the information. This AIE in regard to information sharing therewith determined the investment decision in the secondary sector in such cases, including the choice of industry. In some cases,29 the investment decision was shaped by the practical knowledge of the profession transmitted through “friends” (dost’haa—a term connoting friend as in English but also an acquaintance or someone with whom one has a working relationship). The information transmission was accompanied by active encouragement by the information-provider to invest in an industry. This form of transmission of practical knowledge was seen to become more credible the more the information-provider was close within the kinship group, in which case the subsequent decision was taken with relative confidence. As with a plasticware company,30 information regarding the industry was passed on to the investor by his brother in-law who himself produced in the same industry. The habitus inculcated with “trust” allowed for this transmission of practical knowledge to be seen as a normal event, perhaps even a moral obligation should the information prove to be of serious necessity to the receiver. For instance, two detergent companies31 were established based on inducements from relatives living in Iran who had prior knowledge of this industry. In these cases, the location of the subsequent investment (Kabul) did not match the geography of the original information (Iran). Yet, the underlying AIEs were seen as the structuring influence shaping the investment decision. Practical knowledge transmission in some instances was carried out by a friend or acquaintance who wanted the research participant to become a partner (the information-provider in some cases having left the unit at the time of the interview). Agreement to join a partnership in such cases occurred based on inter-personal recognition. Investments with high  ABNM-P; HM-U; HSSM-P.  HRKM-P. 31  NAAM-P; SNMM-P. 29 30

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initial physical capital, such as two units specializing in iron and rods32 and an electrical wire company,33 were set up in this way. The latter’s reasoning for doing so (who seemed to strongly regret his decision) was that his friend had never shown him the “wrong way” in the past. He saw no reason why he shouldn’t follow his friend’s advice regarding this decision. In one case34 that demonstrates how the above AIEs functioned in the context more lucidly, the research participant was asked to become a partner in a professional domain completely unknown to him—a printing press—by a friend. The friend needed money to buy his then partner’s share in the company with whom he had had a falling out, in a bid to remove him entirely from the company. The research participant, then working as a retailer, agreed to provide the money and, in effect, became a shareholder in the process. Later, the friend had a falling out with the participant as well, leaving the company to him by asking him to purchase his share. Such an ‘unplanned’ and ‘uncalculated’ decision, quite significant to the livelihood strategy of the participant, was regulated by the AIEs ‘trust’ and the three N mechanism. In other incidents, the process of joining an investment venture or deciding to establish a production unit with high physical capital was shaped by the above AIEs as institutionalized practices of individuals’ habitus. Not only was this attitude shown towards relatives, friends and acquaintances who were Afghan and hence easier to access should they renege or mislead, but in one instance,35 a high-value investment was made based on inter-personal recognition between the participant and his Turkish trade partners—who wanted to open a detergent company in Kabul but “only” if the participant made the shift from textile imports to join them as a partner. What was further illustrative of the peculiarity of interest in this instance was that the participant paid a substantial amount as advance payment to his partners (after giving in to their persuasion) so they could purchase machinery from Turkey, without any means of recourse should the partners renege and disappear when they returned to Turkey. In this case, the ethos of “Muslim” honesty and a resignation to “God’s will” were repeatedly made explicit.36  AGHM-P; NNM-P.  JKM-P. 34  MZM-P. 35  MWQM-P. 36  The participant was entirely preoccupied with the detergent company after abandoning his textile imports. The Turkish partners abandoned the company in the first two years—the 32 33

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6.1.3  Responsibility Towards Homeland and Communitarian Norm Among the participants, three-fifths (60.8 per cent)37 referred to a sense of dedication to Afghanistan and its people as a reason why they were interested in investing in the secondary sector. As mentioned, this and factor ‘6.1.1.’ combined structured the initial inducement for the investment decision in an overwhelming majority of the cases. It should be pointed out that in six38 cases (11.8 per cent) from the aggregate number of cases researched in whom only ‘6.1.3’ was discernible as an explicit structuring factor, it was more likely that the information in these cases too was accessed through ‘6.1.1.’ and ‘6.1.2.’—as mentioned in the introduction to this chapter, ‘responsibility to homeland and the communitarian’ norm is a generic subjective/aspirational motive that does not reveal why the decision in manufacturing specifically was taken or why a particular industry was chosen, for which social relations could be the conduit for the practical knowledge. This was a subjective/aspirational AIE that had a regulating effect based on a relatively cohesive ‘national’ image that, despite group-based differences and strong disagreements regarding the symbolism of representing this national image,39 was witnessed to have an appeal for the study participants as a ‘home’. This and the ethical injunctions in the Quran regarding being good to others (altruism), as well as a feeling of responsibility towards the “homeland” (watan) and its reconstruction, were the company was in its tenth year at the time of the interview—because they hadn’t anticipated the difficulties of Afghanistan’s investment environment. All the technology and know-how, including a chemist, were brought from Turkey initially to assist in opening production. The participant, from being a bystander in the beginning so far as the set-up of the unit went, only contributing financially towards the venture, was the only owner and also learned, using a laboratory, the right mix for producing more than 10 different sanitary products (his initial aim was to increase the number to 42 products, which had to be later abandoned). 37  GZAM-U; HSM-P; SNMM-P; AGHM-P; BAKM-P; HSMM-P; DMYM-P; HKGM-P; MSM-P; MZM-P23; NANM-P; ZKF-P; ZMM-P; HM-U; AAM-P; ABNM-P; AM-P18; AM-P27; HMKM-P; HSSM-P; MAAM-P; MEWM-P; MMF-P; NM-P; NSM-P; PKZM-P; ARHM-P; FBF-P; NMF-P; BHM-P; JKM-P. 38  HKGM-P; MSM-P; MZM-P23; HMKM-P; ARHM-P; NMF. 39  Group-based contentions are present and can affect such important symbols as the national identity itself. To illustrate, electronic identity cards with “Afghan” written on them became a matter for widespread contention as the word is not seen as adequately representative of all the inhabitants of Afghanistan (Ahmed and Zahori, 2014). Yet, the notion of a unitary homeland was expressed repeatedly by participants.

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combined set of subjective/aspirational AIEs that were recurrent as themes in participant narratives regarding why they had invested in manufacturing. Among the investors in Kabul, the above AIEs were observed in expressions of duty towards Watan or Keshwar (homeland), mardom (people) and the country’s economy. This was regardless of the gender, age and ethnic affiliation of the research participants or which province in the country they came from. This, at least at the subjective level, indicated the presence of a sense of solidarity and communitarian ethos that was witnessed as a function of individual habitus. This patriotic feeling was supported by visible aspects of the ‘economic’ activity. Meaning that towleed (production) leads to a tangible geographic commitment and a tangible outcome (a product with “made in Afghanistan” labelled on it), compared to trade and services which are devoid of this tangible form of symbolism. The word in Persian for producing is saakhtan, which is also used in the context of “construction” and “reconstruction” (baas-saazi). This being the case, saakhtan as an economic activity was associated with saakhtan as reconstruction in a country requiring both, but perhaps the latter foremost and more urgently. Investors in manufacturing, therefore, were seen to usually confer a higher esteem to their profession compared to other economic activities perhaps owing to this linguistic association. And mo’aled, san’at-gar and tawlidgar (words for producer) sit high among ‘worthy’ professions, as witnessed in how the participants perceived their profession’s importance. However, the relative commonality of the above AIEs among investors did not necessarily translate into direct strategies of assisting the reconstruction process or committing the investor to a cash transfer scheme to the poor or another social programme—only two investors mentioned an ongoing scheme, one40 who funded a school in a neighbouring province to Kabul, and another who organized a crowd-fund annually to help the needy.41 Others provided some financial assistance,42 in cash or in kind, very occasionally or paid “Islamic tax” (zakaat). Among the remaining investors, the service to the country and its people occurred ipso facto, that is, production was the service as such. The participants’ act of establishing  NUHM-P.  NANM-P. 42  BAM-P; ARHM-P; DAAM-P; HMKM-P; HSMM-P; HSMM-P; JM-P; MEWM-P; MMF-P; NM-P; NNM-P; ZMM-P. 40 41

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a link between production and social and patriotic duty, given its immateriality, can be explained as a product of the habitus’ strategy for accumulating the disguised symbolic form of capital. These AIEs helped reinforce ex-post legitimation and a symbolic appraisal of the investment as more than merely the pursuance of money—the latter a behaviour culturally seen as measly in Afghan society, more so if it is made explicit in an environment where signs of poverty are rampant and ‘modesty’ is gradually inculcated in individual habitus through social norms, a feature that we saw is reinforced by the Quran, “…God does not love the arrogant show-­ off” (verse 36, Al-Nisa), where humility and utmost reverence of the ‘supreme entity’ (i.e. Allah) demands precaution in asserting one’s own independent individuality or signs of it in ‘worldly’ pursuits. This was evidenced in the fact that research participants did not refer to the income and monetary aspect of the investment directly as the reason for their investment, always referring to it in tangential terms. If such an interest was mentioned, it was never done outright as the primary reason for the investment—except for only one case43 in which the reference was made in third person: “we entered production sector in Kabul because it is obvious that everyone [emphasis mine] wants to improve their financial well-being”. In participant accounts, the money aspect, if mentioned, would always proceed after a symbolic prelude emphasizing the patriotic and social aspect of the activity. The non-monetary symbolic capital was hence partly also an outcome (similar to ‘economic’ profit) of the investment in addition to being an initial inducement. The institutionalized notion of responsibility towards the homeland and the community as a structuring outcome of the individual’s habitus was expressed in some cases by presenting one’s investment as a “defence” of Afghanistan’s economy in the face of foreign competition,44 an employment generator for the country’s youth,45 or even a service to God by serving his creatures.46 Closely approaching the above was the assertion that manufacturing plays a role that is important for securing Afghanistan’s

 FM-P.  ABNM-P; ARHM-P; GZAM-U; HSM-P; SNMM-P. 45  AGHM-P; AM-P; ARHM-P; BAKM-P; HSMM-P; DMYM-P; GZAM-U; HKGM-P; MSM-P; MZM-P23; NANM- P; ZKF-P; ZMM-P. 46  HM-U. 43 44

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self-sufficiency and economic growth.47 Love for homeland48 and, given the context of the research, seeing a solution in manufacturing for mitigating causes of political violence and other forms of social malice were also pointed out as reasons for the investment.49 Particularly among women investors,50 providing financial assistance to other women through employment generation was a recurring theme. Manufacturing was referred to with words such as service to country and society51; a duty towards the homeland52; a struggle (mobareza)53; a transformational duty for the country;54 and a form of holy war (Jihad).55 Among sub-themes under these AIEs, living abroad (particularly in neighbouring Iran and Pakistan) was seen to induce strong association between the productive activity and the purpose to serve the homeland. Among the sub-group mentioning patriotic and communitarian attitude, more than half (56 per cent) had migration experience. The AIEs here was clearly noticeable in how the life abroad during the period of migration was described by terms that indicated impermanence and merely an interlude before returning “home” where one belonged—where the investment too seemed ‘sensible’.56 At the level of the social institutions shaping the habitus of investors, expressions of social and patriotic duty illuminated an important aspect of the interestedness of investors and how the tendency for self-seeking interest was configured in Kabul by non-material aspirations. The majority of the investors in my study did not seem to perceive the satisfaction of their engagement with the corporeal domain of production independent of the gratifying symbolic element of serving the “country” and the “community”. This, among others, indicates a consciously communitarian ethos

47  AAM-P; ABNM-P; AGHM-P; AM-P27; AM-P12; ARHM-P; DMYM-P; GZAM-U; HKGM-P; HMKM-P; HSM- P; HSSM-P; MAAM-P; MEWM-P; MMF-P; NM-P; NSM-P; PKZM-P; SNMM-P. 48  ARHM-P; HMKM-P; MZM-P23; NANM-P; ZMM-P. 49  BAKM-P; MSM-P. 50  FBF-P; MMF-P; NMF-P. 51  AAM-P; FBF-P; HKGM-P; PKZM-P. 52  NM-P. 53  MEWM-P. 54  SNMM-P. 55  AGHM-P. 56  AAM-P; BHM-P; DMYM-P; HMKM-P; JKM-P; MAAM-P; NANM-P; AM-P27; NM-P.

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and a feeling of responsibility as ordering AIEs of the habitus in the social context.57 The decision to invest in production was influenced by a normative calculation that exalts this activity as a form of conviction over investors being influenced by market signals only to seek maximization of profit. The frequency of the above AIEs as part of the initial investment motive (which is not amenable for direct empirical testing retroactively) indicates the importance of the symbolic element in how investors presently (at the time of the interview) viewed their investment. The social and patriotic outlook as structuring conditions claimed to have induced the investment decision indicates that the legitimation of this activity was not consciously informed, nor does it correspond to, price signals in the market—it was buttressed, at least partially, by its own symbolic logic. More intimately rooted in the personal history of the investor, the decision to enter manufacturing was also justified as a product of ‘personal drive’ in some cases. Manufacturing was associated with making and creating as an aspirational interest, a self-sufficient drive towards a particular industry compelling the investor to make an entry into it. The institutional basis of such behaviour can be the family environment, but I suggest that the origins lie deeper than the regulating effects of AIEs in such cases. The subjective meaning of manufacturing beyond its immediate profit-seeking aspect was expressed as simply “love”58 (eshq)59, “passion”60 (showq)61 or “interest”62 (alaqa) concerning the field regardless of the prospects of its success. As stated by MAM-P, “I wasn’t too interested in the money aspect of [producing panel boards]. I was simply passionate about it and liked it very much”. The ‘innovative’ and ‘creative’ aspects of manufacturing—as against trade, where these qualities are largely redundant; and services, where creativity and innovativeness are mostly non-corporeal and cannot be tangibly represented—came into play in how some investors explained their

57  Apart from the unintentional workings through the ‘invisible hand’ of the market, the habitus of investors produces an intentionally socially aware disposition in them. 58  AAM-P; AGHM-P; NM-P; ZMM-P. 59  A word in colloquial Kabul Persian also used for romantic love. 60  AAM-P; BAM-P; BAKM-P. 61  Showq and showqi in colloquial language denote acts based on passion mostly without regard to its consequence. 62  BHM-P; GZAM-U; MAM-P; MEWM-P; MSM-P; MTM-P; NGF-P; NUHM-P.

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investment decision as creative, innovative and engaging.63 All of these were symbolic strategies in the service of evaluating the investment decision as more than what it was in objective form. The occasional view that manufacturing as a tangible investment will outlive the investor and will be left behind for posterity also showcased the appeal for symbolic self-­ perpetuation (Becker, 1973).64 6.1.4  Market Information, State and NGO Support The number of cases where market information through first-hand prior encounter with retail or trade was witnessed as the regulating mechanism for investing in production was rare as a share of the aggregate—five investments65 comprising 10 per cent of the cases. In these cases, a discernible AIE other than the information that could only be defined as ‘market information’ (in the widest sense of that term) was not witnessed. Market information can be observed as the structuring effect for inducing the investment, albeit partially, in cases where this information was used but regarding a neighbouring country’s market (mainly Pakistan or Iran) where the research participant worked previously or imported66 the goods that the investor later began producing domestically by observing domestic consumption habits. Among the units, in one unit alone67 the investment decision (both in the choice of sector and industry) was informed by a “calculative approach” (a la Williamson, 1993). Previous to their investment in the secondary sector, the two participants68 were engaged in the market (they had retail stores) and among the things they sold was the product they began to produce. At the time the investment was made there were two other companies that were producing the same item, according to the participants (the number had increased to four at the time of the interview). According to one of the participants, their objective was to “outcompete” the other companies and take over the market as a monopoly—this admission was a rare case showing an investor displaying a clear profit-seeking motive without attempting to legitimize it  AGHM-P; HKGM-P; MAM-P.  AGHM-P; AMPM-P. 65  AM-P; NANM-P; HSM-P; SNM-P; ZMM-P. 66  NAAM-P; PKZM-P; ZMM-P; HSM-P. 67  FM-P. 68  This was the outlier unit for which two investors were interviewed (see Chap. 5, Sect. 5.5, for details). 63 64

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through a symbolic disguise.69 The investor also chose the industry with the knowledge that the nature of the product did not require frequent changes in the packaging and style. As such, it was immune from going out of style and seasonal price discounts to rush sales and clear the inventory of already produced goods for new replacements. Some level of being informed by ‘market trends’ was discernible in other cases. In these cases, the choice of profession as “investor” (sarmaya’gozaar) was determined by the AIEs discussed above but the choice of industry showed information-gathering from the market; the investment was made because there were no other producers of the same item70 or the product was deemed “a necessity in the market”.71 In one case, market information had a reverse effect. The investor72 who was in the planning stage of opening a manufacturing business in Kabul changed his investment plan after visiting China and India for purchasing machinery and finding those countries’ markets more conducive (he referred to better security and law enforcement and a sense of stability, as well as other facilities such as access to the sea in case he chose to export). This led to him focusing on investing in India but opening a smaller branch of the production process in Kabul. Tellingly, in this case, the verbal affirmation and strong loyalty to “homeland” and its people was also recurrent, indicating that such a subjective claim remained in a purely symbolic form without much in the way of tangible action (he was actively in the planning process of leaving the “homeland” by moving capital abroad). To conclude, as mentioned above, the income and monetary aspect of the investment was mostly referred to in tangential terms by investors due to the impropriety of making it explicit outright. This also made it difficult to determine to what extent this aspect had a more prominent role in structuring the investor’s decision, which would point to the complexity of individual habitus as structured in the context. However, the AIEs discussed above were couched in the objective life-histories of the investors, which substantiates the argument that the investment happened as an outgrowth of such life-histories that structured their habitus, thus structuring

69  This was the same investor who mentioned monetary reasons as his primary investment motive. 70  HSM-P; NUHM-P. 71  NNM-P. 72  HSM-P.

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their professional expectation as a product of what they perceived as possible and attainable. The formal institutional context as a structuring field, particularly the political changes in late 2001, summarized by investors in the trope “Karzai’s first days”,73 added ‘optimism’ in rare cases,74 also leading to investments in manufacturing but in the form of a non-intrusive macro-­ level backdrop and not as a directly structuring effect for the decision to invest in manufacturing or the choice of industry (such a backdrop could lead, and has led, to a diverse number of ‘economic’ activities inside and outside manufacturing and its effects should be understood as non-­ discriminatory). In one case only,75 information from a government agency regarding a planned power project for importing hydroelectricity from Central Asia was significant for shaping the investment decision, leading to the investor partially shifting assets from his import business to establish arguably the first iron and rod company in the post-2001 period. As for the impact of ‘foreign aid’ as a structuring effect, its role was observed in only two investments76 whose owners benefited from vocational training that later formed the basis of their decision to enter the manufacturing sector.

6.2   Access to Credit Extrapolating from the above discussion, but also reviewing other sets of data regarding access to credit in this section, the explanation here directs attention to QPS horizontal mobility of capital related to the manufacturing sector’s ability to attract external sources of capital—from banks, investment institutions or private individuals. The credit ‘intermediation function’ of the banking system to the private sector in general was reported at only 12.8 per cent of bank assets in 2018 by the World Bank (2019). It was witnessed among the cases that the origin of both the investment capital and subsequent credit remained predominantly personal wealth.77 The category other than personal wealth was social 73  Hamid Karzai was the president of the Afghanistan Interim Administration, and reference to “Karzai’s first days” by interviewees alludes to the start of the post-2001 period. 74  AM-P; BHM-P; HMKM-P; JKM-P; MAAM-P; NGF-P; HSM-P; HSSM-P. 75  PKZM-P. 76  MMF-P; MAM-P. 77  BHM-PARHM-P; BAM-P; FBF-P; GZAM-U; HM-U; HRKM-P; HSMM-P; HSM-P; HSSM-P; JM-P; MAAM- P; MMF-P; MM-P; MSM-P; MTM-P; MZM-P23; NAAM-P; NGF-P; NMF-P; NM-P; NNM-P; NSM-P; NUHM-P; SNMM-P; SNM-P; ZKF-P.

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relations, which was partly the source of the initial capital, seen mostly in partnerships.78 Following the above, family inheritance was the origin of initial capital.79 The rarity of the habit of credit or the non-emergence of an inter-sectoral loan system among investors in the secondary sector to channel surplus capital to needed areas can be attributed to the forbiddance of the practice of interest-based credit in Islamic Law (Sharia). In Kabul, based on observing the tendency of research participants regarding interest-based credit, it can be said that compliance to Sharia, apart from explicitly laying out the codes of conduct to set the de jure limits of practice, had played an ‘effacing’ role, in the sense that interest-based credit as a practical option was mostly not mentioned by participants when asked about sources of capital. This can be attributed to a disregard for, if not ignorance of, the practice of interest-based loans that rendered them uncommon and outside the permissible range of possibilities to even consider. Among the participants in the study where the topic of “interest on loan” (sood) was referred to, it was acknowledged that the loan taken was without interest80 or such loans were simply not sought because interest-­ based loans are unlawful in Islam.81 However, this does not explain why other forms of Sharia-compliant credit were also rare in the context. The Mudarebah system, for instance, is permitted in Islam based on which the creditor and debtor share in the profits and losses of the business—only one participant had taken such a loan.82 Another reason for rarity of credit within the secondary sector, among investors in the form of an inter-sectoral credit system, might have to do with the fact that profits out of daily sales were either re-invested or were not “realized” (earned in the fungible monetary form) in a large enough manner to merit issuing loans to other investors. As will be discussed in Chap. 7, Sect. 7.1.2, in the practice of sales on ograyi (a form of deferred payment in which payment for current sales of goods is deferred to an unknown future and is dependent on the buyer’s sales in the retail market) incoming earnings were continuously re-used to continue the unit’s

78  AAM-P; AGHM-P; AM-P27; AMPM-230718; FM-P; HKGM-P; HMKM-P; JKM-P; MAM-P; MSSM-P; MWQM-P; MZM-P15; NANM-P; QYM-P; RHF-P; ZMM-P. 79   ABM-P; ABNM-P; AM-P18; BAKM-P; BM-P; DAAM-P; DMYM-P; MEWM-P; PKZM-P. 80  NAAM-P. 81  HM-U; QYM-P; SNMM-P. 82  BM-P.

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output level to maintain market share. This rendered credit impractical, in addition to the ever-present structuring effects of habitus. When in need of credit, some investors sold their personal or family property,83 asked friends or relatives to provide credit,84 or secured raw material on credit.85 Transfer of wealth or the authority to sell it in pursuit of a family venture can be explained only by adopting the ‘top-down family hierarchy’ as a methodological lens. One important outcome this structure entails was the reasonable assumption of the collective nature of ownership inside the family under the leadership of the authority figure—who, in turn, makes sure this form of ownership is protected until the division of his inheritance after death dismantles it in practice. As such, the same collective ownership in the family can present itself as a source of credit when a unit is in dire shortage of it. Related to friends, the AIE ‘three N mechanism’ explains habitus’ institutionalized tendency to expect (if not always achieve) assistance from friends, relatives and acquaintances when in need. Moreover, traditional interest-based loan issuance systems, such as banks, were said to demand exorbitant collateral (the property or asset given to a bank to secure a loan) due to concerns arising out of credit repayment (i.e. ‘debt security’). Attempts to take out interest-based loans or being the beneficiary of such a loan has been witnessed in six cases86 (approximately 12 per cent of the aggregate). Among these, half refused to take the loan because the interest rate was set too high.87 Others88 did not discuss whether they considered the interest rate too high and had taken out a loan. Other external sources of capital or lines of credit were not cited by the participants that could be relied on to compensate for the unwillingness of private banks to provide needed capital. Neither was the Central Bank mandated by law to direct commercial bank loan issuance policy based on Afghanistan’s 2003 banking law (see Chap. 4).

 AAM-P; BAKM-P; DMYM-P; MTM-P2808118; RHF-P; FBF-P.  AM-P27; MAM-P; NAAM-P; NUHM-P. 85  MAM-P; NAAM-P. 86  HSSM-P; AMPM-P; BHM-P; JKM-P; MMF-P; MZM-P23; NM-P. 87  HSSM-P, AMPM-P; JKM-P; NM-P. 88  BHM-P; MMF-P; MZM-P23. 83 84

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6.3   Conclusion The pattern in the data suggests that the practical knowledge of manufacturing was socially contingent and formed part of the life-history of the majority of investors, undistinguishable from their lived experience. The initial inducement to enter the sector was regulated by the effects of implicit institutions that are learned and internalized in the top-down family environment. Barring the 10 per cent of the cases where some level of market analysis was observed as the regulating effect of habitus in this field, in the remaining overwhelming majority (91 per cent) the investment decision was structured by AIEs as transmitted through the patriarchal family structure, shaped by the lived experience of investors. The micro-analytic tools (i.e. AIEs) explaining the institutionalized practices of habitus for explaining patterns in the data for this chapter were: (a) obeisance, (b) emulation, (c) perpetuation, (d) “trust”, (e) the three N mechanism, and f) responsibility towards “homeland” and communitarian norm. In a little less than half of the cases investigated, obeisance, emulation and perpetuation of the authority figure, directly or indirectly, were observed as the AIEs responsible for structuring the investment decision. These AIEs were aligned with the top-down hierarchy of family within the environment of which the investor habitus incorporates significant formative knowledge, including the knowledge of professional chances. In addition, social capital based on the inter-personal norms of “trust” and non-pecuniary, non-committal and non-reciprocal relationship functioned as a conduit for the transmission of important information which had a direct structuring effect on the investment choice. The simultaneity of reasons mentioned at different points in the interview for the initial investment decision, furthermore, revealed a decision-making process by which objective and subjective inducement factors interplayed to shape the initial decision to invest. The interestedness of the individual—interestedness in a sociological sense of being the multifaceted motivational engine behind individual practice—was combined among participants with the objective interest of earning a livelihood and a subjective aspiration or interest that tended to view a link between production as such and such norms as fulfilling a responsibility towards the “homeland” and the community. The latter accrued as the symbolic capital to the participants by helping to disguise what was, in purpose and appearance, the domain of the material as something that was immaterial and symbolic.

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The evidence supports the book’s argument that the decision to enter the manufacturing sector in the overwhelming majority of the cases was structured by the life-histories of the investors, transmitted in the form of an embodied practical knowledge that was regulated by AIEs. The conditioning effects of habitus were seen in both the source of the initial capital and subsequent access to credit. That is, habitus’ effects in compliance with Sharia law regarding the forbiddance of “usury” was seen, for instance, to have rendered the practice of credit from sources other than personal wealth, family and social relations as rare and uncommon among participants. This, however, does not explain why other forms of Sharia-­ compliant credit were also rare. In addition to other factors, such as the private sector loan policies, the absence of state-directed credit system, and the predominant method of sales in the context (see Chap. 7, Sect. 7.1.2., for details), the investor habitus had had a direct bearing on the QPS horizontal mobility of capital related to the inflow of capital into the secondary sector, including even Sharia-compliant credit, which was not commonly seen among the cases. As such, manufacturing as an objective professional possibility had not become significant enough based on this metric and remains structurally insignificant in the economy, that is, it was not a determinant for economic resource allocation beyond those whose habitus was exposed to it through a lived experience.

References Ahmed, A., and Zahori, H. (2014, February 18). Afghan ethnic tensions rise in media and politics. New York Times. Becker, E. (1973). The denial of death. Free Press Paperbacks. Bourdieu, P. (1986). The forms of capital. In J. Richardson (Ed.), Handbook of theory and research for the sociology of education (pp. 241–258). Greenwood. Bourdieu, P., and Wacquant, L. (1992). An invitation to reflexive sociology. Polity Press. Quran 4:36. (n.d.). Translated from Arabic by Talal I. ClearQuran.com. Retrieved December 5, 2018, from https://www.clearquran.com/downloads/quran-­in-­ english-­clearquran.pdf Williamson, O. (1993). Calculatedness, trust, and economic organization. Journal of Law and Economics, 36(1), 453–486. World Bank. (2019). Building confidence amid uncertainty. Afghanistan development update July 2019, World Bank Group. Retrieved April 3, 2020, from http://documents1.worldbank.org/curated/en/546581556051841507/ pdf/Building-­Confidence-Amid-Uncertainty.pdf

CHAPTER 7

Data Analysis: Elements of the Field

This chapter has two sections. The first explains elements of the field that constrain capital re-allocation or exit after the participant entered the field of production, in a way binding them to the activity following entry. These elements were not marginal but had to do with the fundamental nature of how this field operated in the context. The effect of the inability to exit was then assessed on QPSs horizontal mobility of capital, inter-sectoral vertical expansion and impersonal exchange. The second section explains the macro-level politico-economic backdrop that was attributable to the two determinants that were discussed in Chap. 1, namely, continued militant insurgency and market-oriented EEA policy. Both of these formed aspects of what I will be referring to as the ‘field of production’. The microcosm ‘field of production’ is, therefore, constructed in this chapter through an expository description of its salient elements. Apart from this objective, through an encounter with these elements, adaptive strategies (see Chap. 8) developed to ensure investment continuation. The chapter, therefore, lays the groundwork for answering the how RQ and its implication in the form of the family hierarchy’s reproduction. It brings the discussion closer to the book’s argument by linking the evidence to structural proxies of significance as a suggestive measure of the material growth of manufacturing as a sector, and the social outcome of this sector in the form of habitus’ reproduction of the hierarchy of power in a patriarchal family inside the field of production.

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The present section delineates the field elements that arose out of machine use, sales and social status preservation. As mentioned, I deal with the structuring effect of these field elements in relation to the extent to which they constrained economic resource re-allocation or exit—within or without the secondary sector. Focusing on re-allocation or exit goes some way in explaining an essential feature of the sector in the context, which was the inability to re-allocate or exit and the “compulsion” (majboriat) to continue the activity in some form due to the constraining effects of field elements. Furthermore, the examination of status preservation in this chapter shows the complex interwoven nature of productive activities with non-material concerns. It bears mentioning that the topics in this chapter partly also contribute towards the previous chapter’s argument. The explanation regarding the inducement to invest as presented in the previous chapter finds support in the fact that investors came to realize the daily facts of production ex post. These facts (which I call the elements of the field) were involved minimally in structuring their decision to invest. If some level of knowledge of these realities of the field were available to the investor before the decision was made, it might have led to a more aware planning and risk management based on expectation of what this decision entailed, perhaps even a change of heart regarding the investment itself, a level of readiness that was not in evidence based on the participants’ responses regarding the elements of the field. Or, conversely, if the practical knowledge of this field was transmitted to the participant and (s)he knew about the conditions in the field and despite them decided to enter the sector (but continued to grapple with these elements), the decision cannot be explained based on the “calculative approach” as it assumes the ability to evaluate economic decisions based on cost and benefits and the probability of maximization of pay-offs, as North maintains (North, 2005). Both of these points, absence of knowledge regarding the internal dynamics of the field as well as presence of this knowledge and yet opting for the decision to enter the field, support the assertion that some other factor must have induced this decision. I have argued, in the previous chapter, that the structuring effect of habitus through a lived experience, transmitting the practical knowledge of manufacturing as an available strategy of earning a livelihood in the environment, was this factor. This section covers three elements of the field. The first is ‘asset specificity’, a term referring to financial and physical assets, primarily technological equipment regardless of its level of sophistication, that were applied by a unit and were specific to the industry of the unit and could not be

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redeployed without a significant reduction in its exchange value (see Chang, 1996). The second element is seen in the form of deferred payment sales, colloquially often referred to as ograyi, a practice of sales based on which monetary payments for current supplies delivered by the producer were deferred by the buyer to an unknown future and subject to the latter’s retail sales. The third is the social status of being a “producer” (moa’led) or “investor” (sarmayadar), the dispositional impacts of which I maintain had a structuring effect insofar as they shaped the self-image of the investor for which the manufacturing activity represented its objective justification. Hence, re-allocation and exit, apart from depriving the investor of the livelihood opportunity (until another investment was made or employment found), could affect her/his social status as a producer or investor. The latter accrued as symbolic capital as a factor that structures the limits of action, which, subsequent to entry into the production sector, helped but also put limitations on the range of the investors’ activity, including and most importantly their ability to re-allocate or exit should they so wish. These three elements could be present in any one case or a single one could structure the decision to re-allocate or exit. Ability to re-allocate or exit is used as a qualitative measure for explaining that the subjectivist volunteerism accorded to the individual in rational choice economics is fundamentally inadequate to explain investor behaviour, and that the physical and symbolic structures of the field exercise important constraints on her/his decision to continue the productive activity. This section reveals a feature of the productive sector in a context that suggests the unidirectional particularity of resource allocation in manufacturing activities, a process that challenges parsimonious explanation in terms suggesting the investor’s spontaneous “calculative” ability to re-­ allocate or exit assets whenever (s)he wishes. The dichotomy of empirical habitus-laden human and ersatz human is explained in light of the corporeal experience of production in dealing with the elements of the field, but also to explain the adaptive strategies for investment continuation (discussed in Chap. 8). Following Fig. 3.5’s diachronic sequence,1 A → B/B’ → C, the current section in the chapter covers B, which, combined with B’ (next section in this chapter), forms the elements of the field. To examine the interaction of habitus and elements of the field in this section, I applied the following AIEs as institutional micro-analytic tools to explain investor behaviour: (1) “Trust”; (2) Communitarian norm; (3) Fatalism; and (4) Social esteem. 1

 See page 117.

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7.1   Machines, SaLes, SociaL Status 7.1.1  Asset Specificity One characteristic element (a physical feature) of the field in most manufacturing units was the high degree of asset specificity, a feature brought about by acquiring valuable tangible assets (machinery, tools and other physical assets) that were specialized in obtaining the interest devised by an investor and whose efficacious utility was to largely cease when a production unit was terminated. The main constraining effect that was experienced due to this feature was the inability to exit and the ‘sunk’ nature of the initial capital invested in these assets, making it less likely to retrieve some level of the initial value of the investment in case of exit, hence compelling the perpetuation of the unit in some capacity. While the choice of industry and the initial investment did determine the degree of asset specificity, to perpetuate production at some level required continuously reinjecting part of the unit’s revenue into renewing the initial physical assets or in purchase of other similar machinery, which in effect led to piling on assets that were specific—asset specificity was not the result of a one-time event and was the outcome of a cumulative process. This tangible element was supported by a subjective behaviour by investors in how they approached this ‘ineluctable’ problem, a tendency that can be partially explained (in addition to machines and physical assets being specific) by a normative disposition in investor habitus pointing to a fatalistic indeterminacy based on the belief that what lies in the immediate zone of control at present can be known and is amenable for manipulation, but what lies beyond, particularly concerning the future, falls outside human power to know. The struggle to continue production partly reflected (or was justified by) this fatalistic belief regarding the future, which made exiting a current profession more likely to entail uncertainty than continuing in some way while battling one’s way through the concrete obstacles that such an element imposed, representing an unconditional inexorable pursuit of interest in a Bourdieusian sense of the term—a pursuit that, deposited into the investor’s habitus through family upbringing, was pre-reflective and irreducible to a calculative cost and benefit analysis. To return to the machines proper, the degree to which assets were specific could be explained with some clarity by dividing the cases into two broad categories according to their capital goods (refer to Chap. 5, Sect.

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5.5, for details regarding machine use in the units in the research). This was by no means conclusive and there was at least one overlapping case among the categories, but the categorization nonetheless was a useful guide to analyse the degree of asset specificity and explain its effects on the ability to re-allocate or exit. The first category included units that used machines that could be used for producing goods other than the one produced principally in which specialization was established at the time of the interview and constituted the main focus of the investor’s initial investment decision in which (s)he had also secured a market share. However, the principal raw material would have had to remain the same (e.g. producing doors instead of electricity panel boards). The second consisted of units using machines that were specific to one specialized product (in which market share was secured), and would either be discarded after their lifespan ends or sold for their iron and other metal value (why they could not be sold as capital goods to incoming investors will be explained below and, in fact, was one important reason why these assets were considered specific in the context).  irst Category of Units F These units (numbering 18 among the cases—35 per cent of the total) had the ability to use the machinery at their disposal to produce items other than the one in which they specialized but using the same raw material. Units under this category fell under the following industries: cement poles,2 electricity panel boards,3 gas cylinders,4 food items produced with basic tools5 and handicrafts.6 The main distinguishing feature of this category was that the machines were not complex. Except for cement pole manufacturing in which some level of automation was observed, in the other industries human hand was responsible for designing, producing and packaging, with no level of machine automation. In such cases, asset specificity was minimal given that the machines were multi-purpose, though this does not reveal whether, in case of exit, they could be re-sold with ease.

 AM-P.  AAM-P; BAM-P; HSSM-P; MAAM-P; NM-P. 4  HMKM-P. 5  RHF-P; MMF-P; SNM-P; ZKF-P; ABNM-P; HM-U; MSM-P; NMF-P. 6  FBF-P; NGF-P; MAM-P. 2 3

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Despite the machines being multi-purpose among these cases, they were also unable to entirely leave the industry as a result of dependence on the same raw material in case of producing another product, even if not a close substitute. Hence, the machinery’s use could be shifted only to an extent and between producing two different products relying on the same principal raw material. To illustrate, a panel board unit could not produce food items with the same machinery given that a food item does not use iron sheets as the principal raw (or intermediate) material. It could, however, produce iron doors and security gates. This sameness of ‘raw material’ presented a form of structuring element because the change could not be too drastic—the investor might have, as a result, preferred to remain in the industry in which (s)he had at least the advantage of specialization and market share. Moreover, the investors not moving between different industries (or opting for exit) could in fact be explained by the reasoning developed in the previous chapter, namely the structuring effects of habitus which continued to be present even after entry into the field. The dispositional AIEs in choosing an industry continued to structure the livelihood earning effort even after significant experience with production. Despite the machinery being usable for another product, the initial product was chosen initially often based on knowledge acquired through a previous life-­ experience which, after the initial step of investment, determined its subsequent trajectory in a significant way. In the case of some manufacturing activities under this category, such as panel boards and gas cylinders, not all the machineries were amenable for multi-purpose use. As per AAM-P, the “mother machines” could be used to bend iron sheets for producing other items, such as doors, instead of producing panel boards. But there were other machines in the unit that were tailored to specific purposes needed for producing panel boards only. S econd Category of Units The majority of the units using machines that were uni-purpose by internal design that impeded purpose-specific modifications to shift to a new line of production fell in this category. These units required initial investment in or subsequent purchase of semi-automatic machinery, that is, machinery that required a human operator to input the functions, but it produced the output through in-built internal mechanisms. These machines were mainly sourced from Afghanistan’s neighbouring countries and the procurement process and transport added to their aggregate

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value—which in turn added to the financial value that was ‘sunk’ in each item of such machinery. A longer time was needed to set up the machinery and begin production due to it having to be imported. Afghanistan being landlocked, the machinery and raw material were carried through mainly Pakistani and Iranian territories to reach southwestern, western or eastern ports of Afghanistan before setting out for Kabul. By the same token, technical know-how to set up this foreign-­purchased machinery was to be commissioned from abroad, adding another expense to the costs associated with the machinery use. Technicians could also charge a higher fee to risk coming to Kabul (Afghanistan in general—a country known as a hazardous work environment due to political violence). Unavailability of technical know-how in the context contributed to the ‘sunk’ cost mainly in relation to operationalizing relatively complex machinery. As a general appraisal,7 technical know-how’s shortage in the context was widely experienced by investors, more so due to the novelty of many of the industries in the secondary sector. Perhaps the most important structuring effect of this on the sector in general was that the expected shortage of technical know-how had dissuaded relying on high-­productivity machinery, which could produce high-value added products given their higher operational sophistication but also brought about a commensurate need for technical personnel,8 and an increasing aggregate cost associated with machinery and asset specificity. This form of asset specificity represented a comparably greater barrier to exit should the investor so wish and should expect to re-sell her/his assets to retrieve a satisfactory value (however (s)he measures this satisfaction) of the initial cost. These industries included iron melting and rods (iron and rods hereafter),9 non-manual food production,10 beverages,11 detergents,12 PVC pipes,13 paper napkins,14 pharmaceuticals,15 plastics,16

 DMYM-P; AGHM-P; MZM-P; AAM-P; AGHM-P; ARHM-P; QYM-P; ZMM-P.  MZM-P; AGHM-P; ARHM-P; QYM-P; ZMM-P. 9  AGHM-P; MEWM-P; NNM-P; PKZM-P; ZMM-P. 10  GZAM-U; JM-P; MZM-P; ABM-P. 11  ARHM-P. 12  AM-P; MWQM-P; SNMM-P; MSSM-P; NAAM-P. 13  BAKM-P; DMYM-P; HSMM-P. 14  HKGM-P. 15  AMPM-P. 16  BM-P; HRKM-P; NSM-P; QYM-P; HSM-P. 7 8

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electrical wire,17 sanitary systems,18 female hygiene products19 and printing presses.20 One cement pole producer21 with relatively high production capacity (100 items or more per day) also came under this category, whose machinery was tailored to this product. In comparison to AM-P (also cement poles but included in the first category), this company had a significantly higher and more regular pace of production. It was seen, at least in the comparison of these two cases, that after passing a threshold of production scale the machinery and the general work set-up became more specific. The general pattern among the second category cases was that they lay at a relatively higher level of technological sophistication. The implication being that both entry into and exit from such industries in the context was harder and costlier—the reason why these investors had chosen these industries despite these facts can be explained by the argument that they had done so owing to the effects of the AIEs explained in the previous chapter. The majority among the units who used the second category of machinery (55 per cent) explicitly described their investment in terms such as getting ‘stuck’ (band mandan)—in reference to how capital and their personal wealth had been held irretrievably by the investment. Entry into these industries represented a one-way road, and should investors choose to re-allocate or exit they would have had to offer their re-sellable assets such as machinery at a small fraction of their original price for their iron content (as scrap metal).22 The ability to retrieve the initial capital was, therefore, significantly limited in these cases and determined one main element in the field. This physical constraint found some reinforcement by “fatalism”—the relevant AIE to explain this theme—as a dispositional tendency, seen in expressions by investors that all their life’s worth “was spent on this factory”,23 their wealth was “drowned”24 (gharq), and their investment  BHM-P; JKM-P.  NUHM-P. 19  FM-P. 20  DAAM-P; MTM-P; MZM-P15. 21  MM-P. 22   ABM-P; AGHM-P; AM-P; ARHM-P; BAKM-P; BAM-P; BHM-P; DAAM-P; HRKM-P; HSM-P; HSSM-P; JKM- P; MEWM-P; MSSM-P; MTM-P; MZM-P; NAAM-P; NUHM-P; QYM-P; SNMM-P. 23  ABM-P; AM-P; BHM-P; HRKM-P; MZM-P23. 24  BHM-P; QYM-P. 17 18

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was akin to “burying capital” (gor kardan).25 It was, as such, perceived as a tenacious “compulsion” (majboriat), not a choice, to keep the unit alive in some capacity. For instance, AGHM-P, explaining the direct effect of larger contingent hurdles in the political economy of the context on his investment, stated that entering the “production” (towleed) sector was a “one-way road… and requires a lot of courage”. In this instance, this would suggest that the producer knew about the industry, but the ‘leap of faith’ attitude underlying the investment can be explained by habitus’ structuring effect. Moreover, assets retained their specificity not only due to their level of sophistication and ‘sunk’ capital, but also due to the rarity of new entrants into the same industry mostly due to the role habitus played in transmitting the practical knowledge of manufacturing through a lived experience. Hence, the ‘generative mechanism’ of social practice was not the same and manufacturing represented a ‘new’ addition to the possible professional opportunities, and the number of those who were exposed to this knowledge from early childhood and decided to enter it were seemingly few. Potential new entrants devoid of this practical knowledge but exploring investment opportunities might have also grown doubtful as to why the investment did not work for the exiting investor. Buyers of machines among other producers were also rare because they were often already equipped before beginning production and would require new machinery if sales levels went up (which was not the case after 2014—see Sect. 7.2.1 in this chapter for elaboration). Moving capital to other comparatively more profitable uses—resource re-allocation within the secondary sector or exit from the secondary sector to another sector in the economy—was therefore not dictated by a spontaneously self-regulating ‘market’ mechanism through competitive price signals. Re-allocation or exit would entail significant cost and could have far-reaching risk in the form of threatening the livelihood strategy of the producer (in most cases the single strategy they had available—see Sect. 7.1.3 for details). This and the other field elements rendered the investment a uni-directional resource allocation. In addition to asset specificity as a technical structuring element, the organization that was oriented towards producing any good also involved costs for the manufacturing unit, which, by re-directing the unit towards the production of a new item, would at minimum require: a) new set of  HSM-P.

25

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organizational capacities (including, potentially, purchase of new machinery), b) new skills and manpower to produce the new good, c) replication of past operations for the new product (e.g. marketing), and d) finding the right institutional business support mechanisms for the new product (e.g. access to industrial exhibitions). The shift to a new product was particularly difficult for manually produced food items and small-scale handicrafts because it was costly for a unit at this level which had, over its lifespan, invested financial and human resources to carve out a niche in the market for the product in which it had specialized. 7.1.2  Ograyi and Sales on Deferred Payment (DP) Ograyi is the colloquial term for deferred payment for current supplies of goods by the seller (in the context of manufacturing, the producer) to the buyer (retailer or wholesaler). The connotation applied more to non-­ durable consumer goods (HSSM-P); hence, I will use it to distinguish these from sales based on deferred payment (DP), the latter being the general category which not only included ograyi but all such sales, including the ones involving durable goods. For the purposes of this research the varying uses of ograyi and DP in the text adopt the word investors themselves chose to refer to their sales strategy. This distinction matters also based on the modes of enforcement. While ograyi was a form of DP sale, it was mostly based on word-of-mouth contract as a result of a process of building recognition—the conscious awareness of it called “trust” by some participants. Some DP sales, on the other hand, involved a formal procedure and were not entirely reliant on word of mouth. The AIE “trust” that supported the practice and institutionalization of ograyi as an ordering mechanism for transactions involved the producer, the retailer and, when the retailer did not directly purchase, the producer and the intermediary or wholesaler.26 This type of sales, as stated by ARHM-P, is a way to secure a share in the market in Afghanistan. As noted by JM-P, “If you want to do business in Afghanistan, trusting people is an inevitable precondition”. Or, according to NANM-P, even if you don’t know the person, you need to rely on ograyi to open your way into the Kabul retail market. It was labelled by BAKM-P as a “habit that is cultural” (kulchari) and “domestic-national” (watani, which is not exactly 26  I will use ‘buyer’ and ‘seller’ instead of ‘producer’ and ‘retailer/wholesaler’ in this section given the topic at hand—sales.

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equivalent to the word national, the latter being less emotionally charged). One outcome arising out of this culture of sales was that it impeded re-­ allocation and exit. Before elaborating on this point, I touch on the origin and detailed definition of the term ograyi. The word ograyi is a cultural transmission from Pakistan, according to MWQM-P. The origin of the term found further support in the fact that investor-returnees from Iran did not show facility or know the usage of the term. Reference to ograyi in general terms, that is, referring to the wider culture of sales in Afghanistan and not only in the case of the investor being interviewed, was common,27 which indicates that while a practical notion of “trust”—a concept that finds its meaning in relation to this form of sales to investors—underlined this form of sales, the practical aspect of ograyi (as sales proper) functioned as an explicit institution according to which enough conscious deliberation is formed in order for it to retain commonality. Underlying this practice are the conditioning effects of habitus as a learned practical potentiality which is transmitted through the mechanism of family as its primary medium and, subsequently, through a later exposure to social life in the context where the notion of “trust” and contingent institutionalized capacities of dealing in the market are learned. The AIE “trust” in this instance can be attributed to the Islamic injunction regarding keeping the sanctity of one’s promise and “word”, colloquially referred to as lafz or qowl, two notions that are often adjoined with “manly” (mardana, as in “word of a man” or “qowl’e mardana”), appraised as a masculine attribute. And the injunction on being honest and just which, as I discussed in the conceptual framework, was refracted by the structuring effects of investor habitus, that is, it is not a direct relationship with the injunction that shaped this act but a pre-reflective and socially diffuse form of it that reaches her/him in an implicit form (refer to Chap. 3, Sect. 3.5, for elaboration). The way ograyi is practised is as such that the seller (company ‘A’) delivers a supply of consumer goods (“routine” products as stated by HSSM-P) in advance of the payment by the buyer (‘B’), which leads to multiple such open accounts in the company balance sheet (not only with ‘B’ but many other buyers). This field element structures the ability to re-allocate or exit by company ‘A’ because doing so would entail two important outcomes. 27  ABNM-P; AGHM-P; ARHM-P; BAKM-P; BM-P; DAAM-P; DMYM-P; HSMM-P; JM-P; MEWM-P; MSM-P; MWQM-P; NANM-P; NSM-P; NUHM-P; QYM-P.

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The first is that the regular buyers of company ‘A’ will seek other sources of supply for the same product, leading to a loss of customers (i.e. market share) for company ‘A’. As described by BM-P and NAAM-P, production has to continue because money is spread in the market as a result of sales on ograyi and not doing so would result in losing market share. This outcome, however, should hold universally regarding business closure and is not context-specific. The second outcome is more relevant to the topic at hand, which is that the chances of retrieving the dues in open accounts are reduced substantially for company ‘A’. Below I explain why this is the case by elaborating the various properties of such sales. The second outcome is also context-specific and is a function of the commonality of DP sales in Kabul where mechanisms for debt retrieval were, meanwhile, not in place as per the participant accounts. For ograyi sales, company ‘A’ when transacting with a new buyer might demand on-the-spot payment or a percentage of the exchange value— depending on how much risk (s)he can take in return for securing a market share—for the first few batches of supplies. This is until a relationship based on mutual recognition is formed that is specific to this relationship and I refer to as “trust”, largely based on face-to-face dealings and based on an unwritten verbal agreement between the two. Subsequent deliveries of supplies, based on this system, are not instantly paid for by the buyer and payments are made incrementally when the next supply delivery is made. For instance, a part of the payment for the July 8 supply is made when the July 20 supply is delivered and so on (this is suggestive and the actual process might include strenuous persuasion by the seller to extract some past dues from the buyer, parallel exchanges of supplies and payments, differences in timing, ad hoc demands and deliveries, variations in prior agreed-upon instalments, variations in amounts paid each time, etc.). In this way, company ‘A”s capital is spread in the market among a multitude of buyers depending on how (s)he can expand her/his market share, gradually retrieving enough of the past dues to continue production on some scale to ensure re-supplies to the same or newly added clients. As such, a higher percentage of what can be termed circulating capital in this system remains in open accounts. As explained by NAAM-P, a mere delay of 10 days in production can undo many years of effort to secure market share, as clients will move to other suppliers in order to be able to maintain their businesses. For buyers, it is when a current supply comes—which forms part of the cumulative supply of goods against which the debt is estimated (minus the amount already paid)—and is sold and the amount

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of profit deducted, as well as enough funds set aside for replenishing the stock of all the other items demanding immediate payment, that they can repay some of their debt to the producer.28 The process of allocating circulating capital to ograyi being irregular, the percentage share of it in the overall value of the company is not clear. A rough estimate was given by MWQM-P, who put the ratio of the value of ograyi to the value of the company’s initial investment at 2 to 1. This means that if a company initially invests $100,000 (on machinery and raw materials), it may require investing another $200,000, albeit gradually, in the form of ograyi to secure a market share. Complete retrieval of amounts due by company ‘A’ from one or all buyers, or a large share of the market value of all present and past supplies, is not possible because buyers (mostly retailers but also some wholesalers) do not often have the money with them equal to the exchange value of all the past and present supplies delivered by all the producers and suppliers. The impediment to such a repayment of all dues is in some way similar to why all depositors, in a modern economy, cannot withdraw their bank deposits at once—the bank’s reserve requirements are only a fraction of the total value of the deposits, which is similar to the buyer in this case who only holds a small fraction of the total value of past purchases in cash. As such, payment by buyers remains contingent on their sales while the producer has to continue producing to deliver current and upcoming supplies. This most often happens by a continual swapping activity, by which the investor swaps the instalments by some clients today to produce goods for supply to another client tomorrow, whose instalments, in turn, feed the production process for delivering supplies to a subsequent buyer (or group of buyers) the day after and so on. Normally what producers29 consider ‘re-investment’ is a function of this swapping activity of instalments into disposable funds for production in an ongoing process. The producer can remove funds from the pool dedicated to this swapping activity (i.e. 28  Mathematically, the current exchange value of supplies on ograyi in the economy (OEV for Ograyi Exchange Value) can be represented as the exchange value of all current consumer goods and raw material stocks plus the exchange value of all past supplies in the economy (VCS + VPS) minus the margin or instalment paid to the producer and supplier at the point of the most recent delivery (M) for each separate item (X); hence: OEVX = VCS + VPS − M. The lower the value of OEVX, the more the available capital, at present, for a supplier (producer or importer) to produce (or import) item X in the economy. 29   SNMM-P; QYM-P; NUHM-P; NM-P; NAAM-P; MAAM-P; JKM-P; HSMM-P; HKGM-P; FBF-P; DMYM-P; BM-P; AM-P.

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save money or take out an uncommonly large profit for household expenses), but this would inevitably result in decreasing the disposable fund for production, which can delay upcoming supplies. The practice of sales described above creates a relationship that makes continuous production in company ‘A’ dependent on instalments which are, in fact, part of the buyers’ revenues for which favourable consumption level (based on people’s purchasing power) is the main condition. When company ‘A’ exits from the secondary sector, her/his clients—the buyers in this case—shift to another source of supply of the same product, which can also be an importer. Chances of non- payment to company ‘A’ increase because this other source (e.g. company ‘C’) can continue producing supplies for the buyer provided that the buyer now shifts the payment to this one, regularly paying some percentage of past dues to her/him. Non-­ payment to company ‘A’ (no longer active) can be done without harming the buyer, while non-payment to company ‘C’ (the new supplier) would mean the latter not having enough funds to produce to deliver subsequent supplies to the buyer—an event that can harm the latter’s business directly but can also imperil an ongoing relationship of “trust”. The same normative compulsion referred to as “trust” does leave it open for company ‘A’ to continue to attempt to successfully close her/his open accounts after closure. But it would depend on the ability of the buyer to pay, simultaneously, both company ‘A’ and ‘C’ while being able to also set aside money as profit (of course, this does not apply if the normative mechanism or the AIE is eschewed by the buyer and (s)he resorts to openly dishonest behaviour without regard for her/his reputation). Moreover, a procedural side to this practice might develop that makes payment of instalments to current sellers more likely. Instalment payment must be a recurring and regular process, but this regularity is linked to regular supply (at which point the seller demands the instalment). That is, regularity of instalment payment and regularity of delivery become inter-­ linked with time. This association between supply delivery and instalment payment can further diminish the likelihood of payment of past dues for a seller who shows up only to demand instalment payment without the delivery part. The form of the agreement for ograyi in some cases might take on a more certified character. An advance payment is deposited as a guarantee,30

 AMPM-P; JM-P; ABM-P; MWQM-P; NAAM-P.

30

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a collateral is placed as a form of payment security,31 or a guarantor (usually another trusted retailer or wholesaler) underwrites the tender by a new retailer or wholesaler. Subsequent deliveries are then supplied without on-the-spot payment of the total sales value. Conversely, in one case,32 instead, out of the $5m invested in the company, one tenth had been spent to make one-off payments to all clients, provided they purchase subsequent supplies in cash. By doing so, the producer had effectively purchased a share in the market to outcompete importers who also sell on ograyi. Formal33 dispute resolution mechanisms were not mentioned by any participant in the study and at least one superintendent (sales manager34) of one of the largest factories in its industry in Afghanistan stated that no third party was involved in the payment agreement—others35 stated that they avoided filing a complaint against clients unwilling to pay for past sales. My assumption is that this had to do with the fact that the implicit AIE underlying this type of sales pre-exists the set of governmental institutions that were established in the post-2001 period and are more diffuse and appear effective in regulating behaviour in marketplace exchange. Whether lack of mention of recourse to regulatory bodies for debt retrieval means such institutions are not present or are incompatible with the structuring dispositions of habitus, viewed as ‘alien’ and ‘intrusive’, requires further investigation. But it is admissible to argue that such mechanisms are not relied on so far as the cases in the research were concerned. Relying on state coercion might also conflict with other AIEs in the context, notably the communitarian norms that convey a sense of social solidarity. Severing ties with a debtor might hold less urgency than maintaining the relationship with her/him which took time to build. The social capital (as an outcome of the dispositional tendencies of habitus enacted in embodied AIEs) amassed in this way makes the retrieval effort to be assessed based on balancing the potential outcomes: the amount of money in question and the accumulated social capital. Dogged pursuit of the former would, among others, indicate lack of restraint by the creditor for the debtor’s social reputation (state police visiting a home or a business  MSSM-P.  NUHM-P. 33  I use this term throughout the book to mean the institutions of the state, particularly the explicit institutions codified in laws and regulations. 34  JM-P. 35  MZM-P23; SNM-P. 31 32

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usually viewed in Afghan society as a grievous violation of home or other private space that is sacrosanct and immune to such intrusions). It might also sever the relationship with clients as a result of exerting unusual pressure, with whom the producer might still wish to maintain at least commercial (if not social) relations in case (s)he shifts to import or retail sectors, or to merely keep up the possibility of re-opening his/her production unit at some point in future. There is also the question of whether ograyi that is norm-driven and not based on laws and regulations, and irregular owing to random demands by retailers and wholesalers, can be legally registered for retrieval and for tax purposes due to its sheer frequency. As such, it functions outside the state apparatus. Formal institutions must first establish the veracity of claims before intervening on behalf of the creditor, which at present is regulated by social norms. Given this, payment of debts by the buyer to the seller in the case of company closure is settled through personal negotiation. Practical aspects of negotiation also affect debt retrieval the higher the number of open accounts the seller has on their hands—an outcome of too widely expanding one’s pool of clientele. Instead of dues being distributed among a manageable number of clients, a high number of open accounts would make following up with each one time-consuming and would potentially require new costs (e.g. telephone bills and transportation). Hence, in a paradoxical effect, while ograyi can threaten the viability of the unit due to shortage of capital, it also has a structuring effect in the form of preventing the closure of the unit. Here, I lay out three objective attributes of the units to better distinguish what type of commodities were often sold on ograyi: 1. Customized production, based on a written or verbal contract between the parties to the exchange, made reliance on ograyi less common. Industries in this category included tailor-made items, such as electricity panel boards,36 cement poles,37 handicrafts,38 gas cylinders,39 and printing presses,40 which produced after a promis AAM-P; BAM-P; HSSM-P; MAAM-P; NM-P.  AM-P; MM-P. 38  FBF-P; MAM-P. 39  HMKM-P. 40  MZM-P15. 36 37

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sory procedure was performed (such as paying an advance). Eleven among the cases investigated (approximately 1/5) fell in this category. Apart from not fitting the attribute of being a regularly supplied item which was often sold on ograyi, customized products were often costly, which made reneging on payment financially nonviable for the unit. However, even in this category some level of DP sales was unavoidable. As AM-P (cement poles) explained, his sales were contracted with clients who themselves were contractors and could repay once the final client (e.g. a coalition forces unit/service, Afghan government agency or some other private entity) made the payment to the contractor who then paid the initial suppliers (in this case, the manufacturer). MZM-P15’s printing press dealt in cash but only after products were supplied to the client. The company dealt based on DP only with those he was “friends with” or knew personally. A panel board producer (NM-P), despite calling DP a form of “selling oneself” (tan-frooshi, the word also used for prostitution), agreed to such sales after guarantees were obtained beforehand or with “friends” he knew for more than a decade. His opposition to the commonality of this practice of sales was a result of the fact that many companies in his industry could not continue as a result of facing a serious shortage of circulating capital due to DP sales and having to shut down. 2. Companies producing non-customized items, such as food items,41 iron and iron rods,42 pharmaceutical products,43 PVC pipes,44 female hygiene products,45 electrical wire,46 plastic shoes and sandals,47 tissue paper,48 detergent,49 printing presses,50 plasticware,51 toilet sanitary systems,52 and handicrafts53 were witnessed to rely commonly  ABM-P; ABNM-P; JM-P; MMF-P; RHF-P; ZKF-P.  AGHM-P; MEWM-P; PKZM-P; ZMM-P. 43  AMPM-P. 44  BAKM-P; DMYM-P; HSMM-P. 45  NANM-P. 46  BHM-P; JKM-P. 47  BM-P. 48  HKGM-P. 49  MSSM-P; MWQM-P; NAAM-P; AM-P18. 50  DAAM-P; MTM-P. 51  HRKM-P; NSM-P; QYM-P. 52  NUHM-P. 53  NGF-P. 41 42

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on ograyi. These units most often had an intermediary operating between them and the final consumer. This intermediary was the one who purchased the products on ograyi. Three units54 which did not produce custom-­made products but avoided selling on ograyi did so by skirting around the intermediary but nonetheless bore the cost of marketing and delivery directly to final customers. 3. The common determinants for DP sales in general (including ograyi) were “trust” and mutual recognition, which partially permitted almost half of the units producing customized products55 to also rely on DP sales. Moreover, in recent years practice of DP sales in the context had increased, exacerbated by declining orders and demand in the economy.56 Non-payment of dues was observed most often among the second set57 of companies who relied on ograyi but also some of those58 in the first set of companies who relied on DP sales. While non-payment remained a potentiality, the ubiquity of the use of ograyi compelled the producers to rely on its practice to secure a share in the market. Of all the investors, just three59 did not practise ograyi or DP sales by any degree, among whom two (NMF-P; FBF- P) were on a very small-scale judging by the estimated current value of total assets, and ograyi was not used due to worries that it would effectively undermine the companies’ viability. Only one producer60 among the cases investigated positively assessed the role of ograyi because his company’s growth was the result of his purchasing his raw materials on this basis—a practice he continued to rely on. One producer61 did not make his sales strategy explicit but he mentioned signing a prior contract with clients before starting a new product (plastic bottles used as intermediate goods). This was often the case with companies relying on ograyi. Despite its double-edged function (as both a threat to the unit and an impediment to re-allocating or exiting), practice of ograyi held one certain advantage for the seller as well, in the form of a reciprocal non-legal  GZAM-U; HM-U; SNM-P.  AAM-P; HMKM-P; HSSM-P; MAAM-P; BAM-P. 56  PKZM-P; ZMM-P; BAM-P. 57  HKGM-P; ARHM-P; JKM-P; MTM-P; MWQM-P; SNMM-P; SNM-P. 58  AM-P27; HSSM-P. 59  MM-P; NMF-P; FBF-P. 60  QYM-P. 61  HSM-P. 54 55

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undeclared agreement from the buyer’s end, to the effect that the buyer was less capable of shifting in the short run entirely to another supplier selling on better terms, given that (s)he had already entered into a relationship of mutual recognition and “trust” which had amassed him needed social capital. Even if this aspect was disregarded in a purely calculative cost and benefit strategy, given that (s)he was indebted to the original seller, the shift could lead to the original seller demanding a payment of all past dues because (s)he is no longer concerned about losing the relationship (his own accumulated social capital) with the client in question. As such, the system also linked sellers to buyers in a bond that functioned almost entirely independent of the price mechanism firstly by the logic of social recognition and appreciation (i.e. social capital) and secondly by the mere possibility of financial duress to the buyer as a result of the original seller (in this case the producer) demanding a payment of all past dues. 7.1.3  Access to Raw Material This sub-section deals with the issue of circulating capital entrapment, as a sidenote but not directly linked to the above debate. Apart from its effect on re-allocation or exit, the credit shortage problem associated with sales on DP was compounded by scarcity of interest-based commercial loans (see Chap. 6, Sect. 6.3, for details) and the importation of raw material from foreign sources. The main structuring effect of accessing raw material from abroad manifested in the form of locking circulating capital away for the period it took for the raw material to reach the investor.62 Purchase of raw material from a foreign origin also required regular access to US dollars as an international currency. This access necessitated frequent exchange of money from the local currency, the afghani, into US dollars—excluding those who purchased imported raw material from traders in Kabul’s market—which could add a hidden cost due to depreciation of the afghani63 considering that prices in the market could not be adjusted daily with the fluctuations in the exchange rate. For instance, the trend in the exchange rate during the year of the fieldwork showed a depreciation of the afghani against the dollar, from 69.4 afghanis against $1 on 1 January 2018 to 75.1 afghanis on 30 December 2018. To bypass the  AAM-P; ABM-P; AM-P; AM-P; AMPM-P; ARHM-P; DMYM-P; HKGM-P; HSSM-P; JKM-P; MAAM-P; MMF- P; MZM-P23; NAAM-P; NANM-P; NM-P; NNM-P, NUHM-P, NSM-P; QYM-P. 63  ARHM-P. 62

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financial costs owing to the exchange rate, in some cases the products were sold directly in dollars in the domestic market.64 But in the majority of cases, investors sell in afghani (domestic consumers all cannot and were, needless to mention, not legally permitted to use US dollars as an exchange tender). I divided the units based on five criteria in regard to their main raw material access: (a) raw material produced outside the country, (b) predominantly produced outside, (c) the component of imported raw material more than domestic raw material, (d) predominantly produced domestically and (e) entirely domestic. Seventy per cent65 of the cases in the research fell under category ‘a’, who used raw material that was produced outside or was of foreign origin. Among those in ‘b’, who predominantly—not entirely—used raw material of foreign origin were two units;66 under category ‘c’ whose raw material was more imported and less domestically produced were two units;67 under ‘d’ who used predominantly domestic raw material were four units;68 and finally, under ‘e’ who used only domestic raw material were seven units.69 The defining characteristic of the units using domestic raw material or predominantly domestic raw material—21 per cent of the cases—was that these units all produced food products and used primary commodities as raw material. However, even among these, chemical components used for production and the packaging used as intermediate goods, which constituted the main cost (if not the main raw material) they incurred, came from outside and presented the same challenges as those units who sourced their raw material entirely from outside. In like manner, for iron melting and rod production units,70 a sanitary systems unit71 and an electrical wire unit,72 the main raw material used in production, iron, bronze and copper respectively, was recycled scrap. This scrap was sourced domestically but  AAM-P; FM-P; HKGM-P.  AAM-P; AM-P; AMPM-P; ARHM-P; BAKM-P; BAM-P; AGHM-P; BM-P; DAAM-P; DMYM-P; FBF-P; FM-P; HKGM-P; HMKM-P; HRKM-P; HSMM-P; HSM-P; HSSM-P; JKM-P; JM-P; MAAM-P; MEWM-P; MM-P; MTM-P; MWQM-P; MZM-P15; NAAM-P; NGF-P; NM-P; NNM-P; NSM-P; NUHM-P; PKZM-P; QYM-P; SNMM-P; ZMM-P. 66  MAM-P; BHM-P. 67  ABM-P; AM-P. 68  MMF-P; MZM-P; SNM-P; HM-U. 69  ABNM-P, GZAM-U; MSM-P; NMF-P; RHF-P; ZKF-P. 70  AGHM-P; MEWM-P; NNM-P; PKZM-P. 71  NUHM-P. 72  JKM-P. 64 65

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the origin of its production was foreign. For the time being, despite these units relying on raw material that was, in origin, sourced from outside, they were not dealing with the challenges that sourcing the raw material from outside could entail—which was temporary given that iron scrap supplies were remnants of war and not as long-lasting as a mine. However, these units relied on intermediate chemical products that were imported, without which production could not take place. Accessing raw material from abroad also affected competitiveness of domestic producers against foreign competitors in the domestic market,73 or should they wish to export.74 In the former case, a foreign competitor incurs a lower cost of production because they have access to intermediate goods at home. In the latter case, domestic producers pay the costs of transporting the raw material, in addition to paying customs when importing it from abroad. Whereas producers in raw material-exporting countries do not incur this cost, allowing them to price their products lower; hence, exporting the same item by Afghan producers to those neighbouring countries (currently not the case) must incur transport costs twice and pay customs twice, raising their prices substantially. When intermediate goods had become available domestically, one investor was seen to have shifted to using the domestic item.75 However, this intermediate item was not directly added to the main end-product. Adding it to the end-product would tarnish its credibility as domestic raw material (or products in general) do not enjoy a good reputation.76 Moreover, in the event that the border with Pakistan or Iran was closed,77 manufacturers and importers were unable to continue their operations. Due to such fears and to minimize the time-delays resulting therewith, building precautionary raw material inventory, for one investor,78 presented its own challenge in the form of securing needed circulating capital. Using Iran for purchase of raw material or transport of goods also posed a challenge due to the US-led international sanctions on the country.

 MMF-P.  BM-P. 75  ABM-P. 76  AAM-P, ABM-P. 77  JM-P; PKZM-P. 78  HSSM-P. 73 74

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The need for intermediate goods in only one case79 induced a separate investment domestically by the same investor. The producer initially had a salt processing and packaging unit (which was inactive at the time) and for this he required plastic bags that were imported from Pakistan—which he chose to produce himself after imports of this vital component were stalled from Pakistan (reason not given). The latter unit too was facing raw material access difficulties because the government of Iran, from where it was imported, had recently limited its exports. 7.1.4  Social Status Preservation By social status preservation I refer to a particular outcome of the AIE “social esteem”—which I defined as a society-wide system of positional appreciation based on profession and the cultural capital accruing as a result—the idea builds on the concept of ‘social position’ as expounded by Bourdieu (see Swartz, 1997, for a discussion of Bourdieu’s formulation derived from Marx and Weber). Here, I do not use social class as couched only in its material dimension as a concept due mainly to the fact that such a formulation might over-extend the understanding of class to all societies without allowing for contextual variation—the variation in question in Kabul’s context being the lack of an understanding of even the nominal existence of classes among the participants. It was, therefore, the non-­ material (the symbolic) ‘class’ (or status) that informed participants’ behaviour and tendency for distinction. The interplay between the material and the non-material was nonetheless complex and requires further investigation in Kabul’s case. The outcome of the AIE social esteem, in addition to its myriad other outcomes, is treated here as a field element due to its acting as a component associated with the tangible/material domain of production which, if production were abandoned, would be deprived of its material justifiability. Preserving this status would, therefore, necessitate preserving its material justification, which in this case was embodied by the production unit. In addition to this, there was another aspect that obtained out of a direct symbolic significance accorded to manufacturing by research participants, thus entailing ‘symbolic capital’ to the owners. These two aspects will be discussed in this section.

 QYM-P.

79

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The point of this section is that production represented not only material but also cultural and symbolic capital that complemented the material elements in the field, where re-allocation or exit could threaten the status of being an “investor” (sarmaya-gozar or sarmaya’daar) and “producer” (tawlidgar)—often adjoined by participants with the term national: “national investor” (sarmaya-gozar’e mili). The topic analysed here is the qualitative distinctions that have developed that indicate status resulting from engaging in production. In most cases, the productive activity formed the investor’s only profession, requiring constant involvement by the investor, partly exacerbated by the conflict-affected market economy of Kabul. Consequently, qualitative changes in social status were linked to this one professional pre-occupation. Except for two investors80—who were among the largest by size in the study group, and potentially also the largest in the country in their industry and able to introduce a degree of managerial division of labour in which the main investors were not directly involved in routine activities of the unit—other investors, given their personal role in setting up the unit and managing its daily affairs first-hand, maintained physical propinquity with the details of production. Being a producer, therefore, defined their daily life. The non-material outcomes of this close contact resulted in a status that is graded in a hierarchy of professions in society, underscored by the AIE defined here as “social esteem”, which worked as a distributional system of cultural and symbolic capital, apart from determining their level of wealth (i.e. social class). Physical propinquity with production shaped how investors subjectively experienced their social standing, and the preservation of this place in society was, in turn, dependent on preserving its objective basis (the production unit). Among the participants, the investment was treated as more than its merely monetary aspect (sometimes even referred to as an act representing spiritual-existential interest). The productive activity’s preservation was thus not aligned with its monetary aspect only, and re-­ allocation or exit was conditioned by this concern in addition to its wealth-related aspect. Physical propinquity with the productive activity was observed by a change in investors’ out-of-work life habits following entry into the secondary sector—seen in the time they could dedicate to non-work

 JM-P; ARHM-P.

80

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activities. A sense of urgency to be physically present in the unit obtained81 and, though in a few cases82 the investors’ work routine allowed more leisure time in comparison to a previous state or to a previous non-production sector job, this free time was only relative, and the investors could not disengage and were required to maintain physical presence to monitor every aspect of the production process. Close engagement with the productive activity was explicitly stated, expressing a feeling of having been overtaken by concern for it (see Chap. 8, Sect. 8.1, for details). In the vast majority of the cases (over 90 per cent), the participants were personally involved in the unit’s inception and its growth to its current state as the main responsibility taker, usually the same person taking charge of investing (and subsequent credit acquisition), internal management, marketing and quality control (see Chap. 8, Sect. 8.1, for how this structure of governance aligns with the family structure). This affective involvement entailed cultural and symbolic capital accruing to the investor, adding a non-material significance to the productive activity on top of it being a material profit-earning occupation—from one among various occupational choices83 among whom the investor might be at liberty to shift if other elements were moot. This raised the unit’s importance to a significant life-project (described as a “tree”84 or a “base”85) that, regardless of the behaviour of market prices, the investor strove to preserve. In more than three-quarters of the cases (79 per cent), the unit constituted the only livelihood activity,86 or the most important component of a complementary set of secondary and tertiary sector investments.87 81  AAM-P; ABM-P; AGHM-P; AM-P27; BAKM-P; BAM-P; BHM-P; BM-P; DAAM-P; DMYM-P; HKGM-P; HMKM-P; HM-U; HSMM-P; HSSM-P; JKM-P; MAAM-P; MAMP; MEWM-P; MM-P; MTM-P; MWQM-P; NNM- P; MZM-P15; NANM-P; NGF-P; NM-P; NNM-P; NSM-P; RHF-P; ZKF-P; ZMM-P. 82  NUHM-P; MZM-P23; SNM-P; PKZM-P. 83  To put it in the language of RCT, transitioning between different available options to maximize utility, from preference ‘A’ to preference ‘B’, as the main determinant of individual behaviour. 84  AM-P18. 85  BAM-P. 86   AAM-P; ABM-P; AGHM-P; AM-P18718; AM-P27; AMPM-P; BHM-P; BM-P; DAAM-P; DMYM-P; FM-P; GZAM-U; HKGM-P; HMKM-P; HM-U; HRKM-P; HSMM-P; HSM-P; JKM-P; MAAM-P; MAM-P; MTM-P; MWQM-P; MZM-P23; MSMP; NAAM-P; NGF-P; NNM-P; NUHM-P; PKZM-P; QYM-P; RHF-P; SNMM- 120718; SNM-P; ZKF-P; ZMM-P. 87  BAM-P; HSSM-P; MM-P.

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Re-allocation or exit would have the investor’s social status, thus far dependent on the productive activity as its material underpinning, be determined in that instance by how the shift to another profession plays out. The above percentage shows one more thing: more than three-­ quarters of the participants did not venture into other investments or sectors unrelated to and parallel to their existing unit, showing that apart from the capital needs of another investment, the shift by withdrawing from the current unit or, parallel to it, investing in an unfamiliar industry or sector to diversify their risk portfolio was not taken. Following market signals was, therefore, not a matter of seamless re-allocation or withdrawal of assets but was mediated by the AIE social esteem. The present enterprise, as a result, was central when it came to investors’ ability to retain social status. For investors in the research, being acknowledged in society (matrah shodan)88 or being placed among the “business class” (tojar)89 was seen as a status-granting cultural dividend of being an investor. The cultural capital of being a producer,90 additionally, was seen in the honour and recognition one receives from other members in the social space. The image of an investor, and his/her perception in society as an “investor” (sarmayadar or sarmaya-gozar) and a “producer” (mowaled or san’at-kaar),91 constituted her/his view regarding her/his social status. This translated, in some cases, into a disposition that defied the spirit of surrender (tasleem)92 by abandoning the activity in the face of hurdles. It was also stressed that, even though material changes from production were measurably significant, the non-material “spiritual gains” (dast’aaword-e manawai) were greater to the investor.93 To others, their “good reputation” (naam-e naik) and it being widespread in the market in their industry was emphasized. In responses to the question “To which social status do you think you belong?” investors predominantly insisted on belonging to the “middle class”94 or other less precise classifications (itself an outcome of an absence  DAAM-P.  HSM-P. 90  BAM-P; NM-P. 91  AGHM-P. 92  AAM-P; HKGM-P; MM-P; HSMM-P; MMF-P; MZM-P23; NSM-P. 93  HM-U. 94  AAM-P; AMPM-P; BHM-P; FBF-P; FM-P; HM-U; JKM-P; MAM-P; MWQM-P; MZM-P15; MZM-P23; NSM- P; NUHM-P; QYM-P; RHF-P; ZKF-P. 88 89

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of knowledge regarding social stratification) such as in possession of “fairly good financial standing”; financially “moderate” or “good” (khoob),95 earning enough to be “satisfied” (raazi)96 or earning enough just to be able to “cover the business costs”,97 other terms used for this including “having a good reputation”,98 being “trustworthy”,99 “respectable”,100 “likeable” among people101 and being included among the “business class”.102 In one case, the investor’s image of belonging to a family with a long legacy in business was what defined his understanding of his social class,103 and in another,104 the investor saw belonging to the community of “investors” (sarmayadar) as a signifier of his social class, which implied financial well-being—it was added though that “it depends on what we count as wealth… I have health, credibility, and social respectability, which are forms of wealth [I have] that cannot be purchased with money”. The investors generally did not want to be seen as boastful of their wealth or to be associated with the “rich class” which might, from the standpoint of the same social system of status-based appreciation, be viewed as lacking in personal modesty—modesty and humility being the dispositions of habitus going back to the predominant belief system, Islam, which calls for humility before God (see Chap. 3, Sect. 3.5, for elaboration). The tendency for symbolic concealment of the monetary pursuit was therefore common. This was also viewed in the recurrence of avoiding mention of material gain from production and reference to non-material outcomes accruing from it in response to whether they had seen a change in their social status.105 In only one case (NANM-P) the investor did not prevaricate, referring to his $2m investment in the company as a sign of being rich, and 95   AGHM-P; ABM-P; AM-P18; BAM-P; BAKM-P; BM-P; GZAM-U; HMKM-P; HRKM-P; HSSM-P; MEWM-P; MTM-P; NANM-P; NNM-P; PKZM-P; ZMM-P. 96  DAAM-P; NM-P; SNM-P. 97  AM-P27; MM-P; MAAM-P; BAM-P; BHM-P. 98  AGHM-P. 99  BAKM-P; SNMM-P. 100  HSM-P; MWQM-P; NAAM-P; PKZM-P; SNMM-P. 101  HRKM-P. 102  HSMM-P; MAAM-P. 103  HSM-P. 104  SNMM-P. 105  AAM-P; ABM-P; AGHM-P; AM-P18; AM-270318; AMPM-P; BAM-P; BHM-P; BM-P; DAAM-P; DMYM-P; FM-P; GZAM-U; HM-U; HKGM-P; HMKM-P; HSMM-P; HSM-P; JKM-P; MAAM-P; MAM-P; MEWM-P; MM-P; MTM-P; MWQM-P; MZM-P15;

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contended that he could not be counted among the poor in society. He thought society too treated him with the same estimation. In another (SNM-P) the investor judged, based on his contact with lower, middle and the higher social classes, that he “has whatever is needed for a comfortable life”—insinuating that he considered himself among the better off in society. Others avoided direct reference to representations of wealth. Expressions of moderation and frugality formed important dispositional components of “self-esteem”, supporting the argument here that the investors’ self-image was not defined by an attitude for seeking wealth only, even though their actual activity was primarily meant to achieve this end. It was this other image of a “struggling benefactor” and the non-­ wealth aspect of their identity that, although tied closely with the material reality of their social status as producers, was the object of their efforts to preserve in addition to the material/income aspect of the productive activity. As noted by QYM-P, a producer is not rich (san’at-kaar, pool-daar nes). This self-image transcends close alignment with how the competitive market prices is thought to guide the investor in or out of an investment. It is much more personal, detached from being directly affected by the materiality of success or failure in the market and perceived largely, in addition, in a non-material and symbolic form. Social status was perceived also by comparing its current state with its pre- investment state when an investor was seen as an “ordinary” member of society,106 was engaged in financially low-earning professions such as teaching and shop keeping,107 or did “menial work” (kaarigar),108 or farming.109 In many cases, the perception the investors believed society had of their financial standing was higher than they thought of it as actually being; they thought people viewed them as wealthier than they really were.110 This self-appreciation from the other’s viewpoint (real or imagined) was found to strengthen the link they viewed between their current productive activity and their social status—given that being seen as wealthy MZM-P23; NAAM-P; NM-P; NNM-P; NSM-P; NUHM-P; PKZM-P; QYM-P; RHF-P; SNMM-P; ZKF-P; ZMM-P. 106  AAM-P; MAAM-P; NNM-P. 107  AM-P18; NMF-P; ABM-P. 108  AM-P27; MAAM-P; NAAM-P; NGF-P; NM-P; QYM-P; SNMM-P. 109  GZAM-U. 110  AGHM-P; AM-P27; AMPM-P; BHM-P; DAAM-P; DMYM-P; FM-P; GZAM-U; HKGM-P; HMKM-P; HSMM- P; HSSM-P; MAAM-P; MAM-P; MM-P; MTM-P; MZMP15; NM-P; NNM-P; NUHM-P; PKZM-P; QYM-P; SNMM-P; ZKF-P.

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(the cultural dividend) to them was directly linked to being the owner of a production unit. The closure of the unit would predictably, and until the same professional standing was established elsewhere, deprive the investor of the objective basis of this self-appreciation. Other patterns were observed in terms of preferences in habits which were indicative of signs of social status, for which the investor’s current production unit and its material gain was necessary to maintain. This was seen in (1) sending children to private schools, (2) developing ‘in-group’ friendship bonds with other producers and private investors, (3) changing mode of transportation (personal car), 4) and going for Haj pilgrimage. These objective signs of social status showed patterns of behavioural distinction in the process of becoming an “investor” that, although not necessarily an outcome of the productive activity per se, were at least partly a product of the cultural capital attached to them. I elaborate on these visibly objective signs here: 1) Private schools in Kabul emerged in the post-2001 period. Traditionally, the school system in Afghanistan has been government-run and free-of-charge, which remains the predominant schooling system—given that the number of private schools compared to public schools has been negligible and remained focused in larger urban centres like Kabul. Free public schools (and universities) are open to Afghan citizens of any social background from early primary111 to—subject to passing an entrance exam—the entry and completion of a university undergraduate degree (some institutes also provide postgraduate courses). Private schools, on the other hand, are exclusive because they charge a fee and do not operate like a public service like public schools. Hence, private schools represent a class boundary that is based on a measure of financial capability, unlike the uniform treatment of all citizens in public schools. Apart from their apparent purpose of providing an educational opportunity, private schools represent a sign of distinction that is supported by ‘economic’ capital but is an attribute of being

111  The Afghan school system begins with class 1 and continues to class 12 (class 1 usually coinciding with age six). The 12 years of schooling is divided into primary (1 through 6), secondary (7 through 9) and high (10 through 12) stages. The student graduating from 12th class is granted a state-approved baccalaureate degree.

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in possession of a status’ cultural capital as well—they are for a few who can afford them. As such, sending children and family members to private schools indicated distinction and showed, among others, belonging to a separate social group than the predominant masses. This was what almost three-­quarters (69 per cent) of the investors in the study did as well112—others either did not have children or, in rare cases, sent their children to public schools. As stated by NM-P, who sent his children to private schools, “all kinds of people” come to public schools—a reason why he considered sending his children above class 6 to public schools to get a chance of interacting with people of other social classes as a matter of personal development. A pattern was not identified among investors themselves in regard to their education level, which included various categories, such as vocational training,113 undergraduate,114 postgraduate,115 semi-higher education,116 high school,117 middle school118 and no education.119 2) Status distinction was observed in the attitude of the investors to maintaining friendship bonds with those they considered as peers and belonging to the same professional group. From the participants in the study, more than three-quarters (77 per cent)120 described their friends as predominantly in the same professional field as themselves or other professions close to it (e.g. if not in pro112   AAM-P; ABM-P; AM-P27; AMPM-P; BAM-P; BAKM-P; BHM-P; DAAM-P; DMYM-P; HMKM-P; HRKM-P; HSMM-P; HSSM-P; JKM-P; MAAM-P; MSM-P; MSSM-P; MTM-P; MWQM-P; MZM-P23; NANM-P; NGF-P; NSM-P; NMF-P; NM-P; NNM-P; NSM-P; NUHM-P; PKZM-P; QYM-P; RHF-P; SNMM-P; ZKF-P; ZMM-P. 113  AAM-P; BAM-P. 114  AGHM-P; AM-P18; AMPM-P; BAKM-P; BM-P; FM-P; HSMM-P; HSM-P; HSSM-P; DAAM-P; DMYM-P; JKM-P; MEWM-P; MM-P; MWQM-P; NNM-P; NUHM-P; RHF-P. 115  HKGM-P; MSM-P; MSSM-P; SNM-P. 116  AMPM-P; NANM-P. 117  BHM-P; HMKM-P; JM-P; MAM-P; MTM-P; MZM-P23; PKZM-P; QYM-P; ZMM-P. 118  NSM-P; SNMM-P; ZKF-P. 119  AM-P27; HRKM-P; NAAM-P; NGF-P; NM-P. 120   AAM-P; ABM-P; AGHM-P; AM-P18; AMPM-P; ARHM-P; BAM-P; BHM-P; DMYM-P; GZAM-U; HMKM-P; HM-U; HRKM-P; HSMM-P; HSM-P; HSSM-P; JKMP; JM-P; MAAM-P; MAM-P; MEWM-P; MM-P; MSM-P; MSSM-P; MTM-P; MWQM-P; MZM-P23; NANM-P; NGF-P; NMF-P; NNM-P; NSM-P; NUHM-P; PKZM-P; QYM-P; RHF-P; ZKF-P; ZMM-P.

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duction, in import and export trade). The social status distinction was accentuated by developing and maintaining social ties (i.e. friendships) within the circles that the investor saw as closely aligned to her/his profession, the word producer (san’at-kaar) or the more widely used “businessman” (taajer) forming a sign of professional distinction. 3) Social status was made explicit by other, more visible representations of distinction, such as type and number of personal vehicles. This sign of distinction was most apparent with respect to the community one lives in and among one’s peers. In the context, the model of car and its company represented financial standing because cars with a higher model, recently produced, or produced by popular brands are more expensive compared to others. Buying a car of an expensive brand, hence, showcased a change in one’s financial standing. Some investors121 had changed their cars—from cheaper to more expensive—from what they had before becoming an investor. It was also pointed out by those who did not change their car brand that this was intentional so as not to be seen as displaying their wealth. 4) Going on Haj pilgrimage represented another sign of distinction seen among some investors.122 This is the last among the five main pillars of Islam (for’o or benaa), five principles that each Muslim should accomplish depending on physical and financial capability. To demonstrate utmost piety, a Muslim should perform them step by step,123 the last being “Haj pilgrimage” (haj). The individual performing Haj has fulfilled the last, most enduring and most financially costly step among the five pillars and (s)he is entitled to carry the epithet Haaji (for men) and Bibi Haaji (for women) in Afghanistan, thereby always reminding the society of this one-time (or many times in some cases when the person has the financial means) act of religious devotion. Going on Haj, apart from being a show of piety, requires the costs of travelling to Saudi Arabia, which 121  AAM-P; AM-P18; ABM-P; BAKM-P; DAAM-P; FM-P; HKGM-P; HSSM-P; JM-P; MSM-P; MZM-P23; NANM-P; NMF-P; NUHM-P; PKZM-P. 122  ABM-P; AGHM-P; ARHM-P; BAM-P; DMYM-P; HKGM-P; HMKM-P; HRKM-P; HSMM-P; HSM-P; HSSM- P; MEWM-P; MSM-P; MWQM-P; NAAM-P; NANM-P; NSM-P; NUHM-P; PKZM-P. 123  The others are “declaration of creed” (kalim’e shahadah), “prayer” (namaaz), “fast” (roza) and paying Islamic “taxes” (zakaat) respectively.

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means the ritual can only be performed by persons who are endowed with adequate financial means to do so. It therefore carries, in addition to its apparent representations, another significance that complements the investor’s attempts at demarcating her/his social status distinction. 7.1.5  Symbolic Capital Among the cases, the disguised form of capital (justification of the material pursuit with symbolic appreciation) was underlined by the following AIE among the cases: communitarian norm, which is the embodied practice rooted in Quranic injunctions inculcating a charitable altruistic disposition towards one’s relatives and neighbours and the poor. This also encompassed a commitment to an abstract notion of unitary “homeland” (watan), a norm reinforced in some cases by a subjective solidarity with a war-torn “homeland”. This was a symbolic justification that unlike the participants’ claims regarding the initial inducement for investment along the same set of arguments (see Chap. 6, Sect. 6.1.3) was currently stated and, contrary to recalling what their subjective reasoning for investing in the secondary sector was, was a current subjective condition actively experienced (albeit when the interview took place). The sense of responsibility towards the homeland was the reasoning given by a majority for why they continued their engagement in the production sector, in total comprising 71 per cent of the investors. Moreover, a sense of satisfaction was in evidence from being involved in production based on what was referred to as spiritual or non-material (manawai—a word that includes all things transcendental and spiritual as against concrete and tangible). One important part of the non-tangible component of the incentive for continuing production in the context was its contribution to the country’s economy,124 the community125 or both of them combined.126 Manufacturing by its physical attributes being geographically tethered to the economy of Kabul (and by extension Afghanistan) strengthened 124   AAM-P; AM-P18; DAAM-P; DMYM-P; HKGM-P; HM-U; HSSM-P; JKM-P; MEWM-P; NUHM-P; SNMM-P; QYM-P. 125  ABM-P; BAM-P, FBF-P; FM-P; MTM-P; NGF-P; NNM-P; NSM-P; RHF-P; ZKF-P. 126  AGHM-P; ARHM-P; BAKM-P; GZAM-U, HMKM-P; HSM-P; JM-P; MAAM-P; MM-P; MSM-P; MWQM-P; NANM-P; NM-P; ZMM-P.

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this notion among study participants, that this sector embodies one’s commitment to the country and its people more than other activities. This was observed in the comparison producers made between their productive activity and import and export trade, which is the largest and most favoured choice for private investment in Afghanistan, responsible for 51.7 per cent of all private sector business licences issued in the post-2001 period (until March 2018 when this data was accessed), a sector to which producers were mostly exposed either as buyers of raw material from importers or due to they themselves having been in trade before. Manufacturing, in contrast, was responsible for just 4.8 per cent of business licences (see Table A1 in the Appendix for a distribution of business licences by sector). The export and import trade sector was appraised as more inclined to earning a profit only; hence, it was seen as primarily material in its motive. While manufacturing, in addition to its material aspect, was seen as bound geographically to “homeland” and its “people”. The relationship between the employee and employer was also shaped by person- to-person meeting and familiarization and the owner interacting regularly with the workers on personal terms. For example, a worker requiring leave was more likely to directly entreat the investor than an intermediary. The two points in the hierarchy, the owner and the lowest employee, mostly met prior to recruitment and were in regular contact with each other in the workplace. This was because the majority of the investors in the research (96 per cent) attend to, supervise and dictate the details of the activities in the unit first-hand by being physically present. The relationship between the employer and employee in such instances, particularly with long-term workers, went beyond the limits of a prosaic work contract (which was mostly absent—see Chap. 8, Sect. 8.2.) and was based on personal contact. The communitarian AIE enacted through the mechanism of close contact with workers and other staff in the company imparts a sense of responsibility for keeping them employed. It is important to distinguish between what the investors perceived as an outcome of their production and what it, in tangible ways, delivered for the homeland and its people—which was rarely discussed. The idea behind their continued engagement focused mainly on what their productive activity is meant to achieve. The outcome could be positive or negative, monetary or non-tangible. The perception of what the business was meant to achieve is the object to which I am drawing attention here, as a form of symbolic justification for continued engagement in the sector. This being at the level of a sentiment, although complementing other factors,

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originated in the AIE in Kabul that views dedication to the homeland and its people as a positive attribute. To gain access to this attribute while fulfilling one’s livelihood duties by earning a profit was a significant factor that accrued symbolic dividend to investors—a form of non-material capital that in the last analysis has its basis and reason for existence in the material domain of production. Familiarity with the context which conditions the investors’ “horizon of expectations” (habitus) was encapsulated in a unitary nation, colloquially referred to as “homeland” (watan). Living in watan and, more importantly, taking part in its reconstruction through the act of production appeared objectively reasonable because the habitus of the investor was derived from this objective milieu where the investor feels “at home”—it comes naturally to live and work in such an environment. This was accentuated by knowledge of livelihood conditions that was gradually transmitted into the habitus as a practical generative scheme. Additionally, the norms governing social interaction, social ties and myriad other realities in implicit or explicit form give the context of habitus’ development a typical characteristic that one may not find with the same extent of refinement and instinctive understanding as with other social settings. The distinction the secondary sector offers with respect to the homeland and the community is that it results in towleed, a palpable outcome that embodies the communitarian AIE, represented in Persian language in the word towleedgar (maker), closely linked to the concreteness of “building” (saakhtan) and seen as intimately aligned with the pursuit to re-build a country that has witnessed periodic political violence since the late 1970s. The trade sector was devoid of this tangible aspect as it was mostly meant for earning a livelihood—and it mostly does not lead to hiring domestic workers or purchase of domestic raw material. Services are intangible by nature. Subsistence farming is yet to be overwhelmingly replaced by private sector investment in primary production to make it a contender in the symbolic market, where the value of an economic activity was assessed by its commitment to the country and society. Hence, manufacturing—described as the backbone of a country’s economy127—is the sector which rises in importance based on this appraisal, requiring the type of personal sacrifice that investors believe was at its forefront. This was expressed in statements like “It is up to us to build this country”,128 “I see  HMKM-P.  BAKM-P; HSM-P; NNM-P.

127 128

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myself in an economic battlefield in defence of my country”,129 “My investment capital belongs to these workers also and not just me”,130 “This money is the country’s money and should be spent carefully”,131 “If ten individuals work for me, ten families will have an income”,132 and “I don’t measure my wealth by the amount I have in the bank, but by the sincerity of the bond I have built with my workers”.133 The purpose of continuing the investment to merely “feed our employees” or express benevolence towards them whom some investors referred to as “our boys” (bacha’hai maa) or “our apprentices” (shagird’hai maa) was witnessed recurrently as a form of symbolic reasoning underpinned by the communitarian AIE. Re-allocation and exit, therefore, would have to take into consideration the preservation of this and the investor’s social status that were directly linked and justified based on being a “producer” (towleedgar).

7.2   The Two Determinants Apart from the above elements of the field that structure the ability of the investor to re-allocate or exit, this section draws the analysis towards those aspects of the field that, relative to those in the first section, were a degree removed from the particular level at which manufacturing practices exist. The elements discussed here were not specific to manufacturing per se, the distinction between these elements and the ones explained in the first section seen in their structuring effect. Whereas the elements in the first section were analysed for their effects on the ability for resource re-allocation or exit, the effects of elements in this section functioned insofar as they form the political economy backdrop in the context. They include: a) Susceptibility to security conditions b) EEA’s effect, including government role in production, and international and national competition Attributable to the two determinants that were discussed in Chap. 1, the saliency of the above two field elements was derived by observing  NSM-P.  MM-P. 131  MSM-P. 132  MWQM-P. 133  NM-P. 129 130

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patterns in the participants’ (un)prompted responses, often in answer to questions in the questionnaire but also in the form of digression from the theme under focus. Details of the two elements were mostly acknowledged by investors for their capacity to pose a “challenge” (janjaal or moshkel) to their productive activity. They originated outside the zone of decision-making control of the investors but were, even so, directly relevant to the process of production. It should be noted that the second of the above two elements brings out the structuring effects of the explicit form of institutions, namely, EEA’s legal and regulatory role in the form of market-oriented resource allocation. The militant insurgency too formed an explicit form of environmental “constraint” and, as such, performed a semi-institutionalized, irregular role. Following entry into the sector, the subsequent encounter of the investor habitus with the field of production was shaped by the elements discussed in this chapter, through which strategies to ensure investment continuation came about (discussed in the next chapter). The field elements in this section could lead to primarily two outcomes, namely, time-delays and financial costs which were derived—in the form of qualitative descriptions only—from participant experiential accounts. What I mean by time-delay and financial cost can be illustrated by imagining company ‘A”s sequential or parallel processes of securing raw material, hiring the required number of labourers, and producing and selling the product. If these processes, among others, take more time than was otherwise considered as average in the context (also applicable for financial cost), then the time-difference (money difference) is taken as a time cost (financial cost) here. This information was accessible to the investor and me mostly in a qualitative state owing to the reason that quantitative measurement of the average time/financial cost and departure from the average would require collecting ongoing data on a daily basis, which did not appear as an integral part of the managerial ethos in the context. This measurement, furthermore, did not form part of the research scope, and if it did, it would nevertheless rely on ‘empirical human’ accounts to arrive at the quantitative data. An easier way was to at least capture the subjective time-delay and financial cost by relying on participant accounts, the qualitative expressions of “delay” from what investors otherwise consider a “normal” time period.134 134  As Nee and Swedberg note (2005), not even in NIE that has overwhelmingly focused on “transaction costs” does a standardized system of indexes for them exist for use in empirical analyses.

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Moreover, the time and financial cost originated mostly in the larger political economy of the context in areas that lie outside the scope of this research—the origin of, for instance, not being able to make a timely payment might lie, inter alia, in the inadequacy of payment methods, the problems of transitioning between past and present technologies of payment, the delay in a banking transfer, the accidental power outage that causes an unforeseen postponement of a payment, a security incident that derails smooth business flow, and the physical transfer of cash in the absence of a bank account. While financial costs might be expressed in monetary terms when record keeping is available, this too is subject to a moving average, time-delays that differ based on the context and, most importantly, the human understanding of it. Study of such myriad factors would amount to a holistic exposition of every factor that has a direct or indirect bearing on productive activities in the form of time or financial costs, which is not the purpose here. 7.2.1  Susceptibility to Security Conditions I plainly asked participants whether “security” (amniat—referring both to political security and personal) conditions or particular incidents in the context had a direct impact on their activities. Answers were mostly given in reference to the security incidents affecting everyone in a general way, that is, an incident such as a terrorist attack in Kabul did not distinguish in how it affected one from another person. Overall and in addition to the question in the questionnaire prompting this theme, the word “security” (amniat) was mentioned 190 times by participants. This “challenge” (moshkel) had a direct link to their productive activities in various ways— discussed below. Of the total population of participants, more than half (57 per cent) used the words “suicide attack” and “explosion” or recounted an event involving open hostilities in explaining the impact of security conditions on production. A common theme in this area was the drawdown of international troops by the end of 2014 (‘drawdown’ hereafter) as part of the transfer of security responsibilities from NATO to Afghanistan’s National Defense and Security Forces (putative official title of the post-2001 Afghanistan government military and security forces). The drawdown had been planned by US President Barack Obama in a roadmap announced in 2011 to

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reduce US troop numbers in Afghanistan in a gradual process until the main security responsibility was officially handed over to Afghanistan’s security forces in June 2013 (for details, see SIGAR, 2018)—the year Afghanistan was ranked as a ‘worst performer’ in the Fund for Peace ‘Fragile State Index’ in 2014 (Fund for Peace, 2014). According to some participants, the drawdown was stated to have led to a widespread sense of uncertainty and impending collapse of the post-2001 political system among investors, raising doubts concerning the post-2014 prospects of their investments.135 Following this historical juncture, security challenges (e.g. suicide attacks) and economic challenges136 were said to have increased in Kabul, and based on one assessment “no one is ready to invest here” under the current conditions, willing instead to “transfer their capital to Dubai and other safer places”.137 The effect of the drawdown was experienced—apart from reference to the ‘economy’ in its totality—mainly in the form of financial cost owing to the reduction of the output volume for manufacturing units.138 The volume of “work” (kaar, a general reference to remunerative activities) and investment declined in general.139 In one illustrative case providing an idea of this reduction (though not representative of all cases), a unit’s140 annual revenue decreased from a rough estimate of $4700 (2015 exchange rate) two years prior to the interview to $700– $850 in 2018. In this case (a handicraft unit) the reduction was particularly sharp (approximately 600 per cent) because the unit catered mainly to foreign civilian personnel in embassies and other customers to whom traditional Afghan clothes were appealing, the group of customers whose numbers also decreased parallel to the drawdown. Other production units that mainly supplied to international coalition troops or the international civilian workers in the country decreased in

 HSSM-P; ARHM-P; MWQM-P, NSM-P; DMYM-P; HMKM-P; MSM-P.  AAM-P. 137  MSM-P. 138   AAM-P; ABM-P; AM-P18; AM-P27; ARHM-P; BAM-P; BHM-P; DAAM-P; DMYM-P; HSMM-P; HSSM-P; MAM-P; MAAM-P; MM-P; MZM-P15; MZM-P23; MWQM-P; NM-P; NSM-P; NUHM-P; PKZM-P; SNMM-P; MAM-P; NGF-P; NM-P; BAKM-P; NAAM-P; DMYM-P; ZMM-P; QYM-P. 139  AAM-P; MTM-P; MZM-P15; NAAM-P; ZMM-P. 140  NGF-P. 135 136

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their output volume after 2014.141 A decline in overall international assistance had an impact on the level of demand for these companies’ products (see Chap. 4, Sect. 4.1, for details). Related to security proper, the two words used by participants that suggested the gravity of the security condition and its structuring effect on their productive activity were “suicide attacks” (intehaari)142 and “explosion”143 (infijar, used synonymously with intehaari but not necessarily always involving a suicide attack). Open hostilities involving fighting between different sides to the conflict in Afghanistan, in Kabul or in other provinces, was also seen as having resulted in time-delays and financial costs.144 Other forms of events in the politics and social space were mentioned—for example, public protests145 and elections146—but the common factors under this field element mainly had to do with suicide attacks, explosions and open hostilities. In a generic reference, the effect of this element in the form of a total halt in productive activity can be assessed based on the time estimates of decreasing activity level in the economy following a security incident. The period of halt in activities was said to range from three to four days147 to one week,148 one week to ten days,149 two weeks,150 a month151 and a month to 40 days.152 These incidents tended to have a broad-ranging impact on production and sales153 (including access to customers in other provinces), and in some cases induced shrinking productive capacity mainly by laying off

141   AAM-P; BAM-P; DMYM-P; HSSM-P; MAAM-P; MAM-P; NGF-P; NSM-P; NUHM-P; MZM-P15. 142  AAM-P; AGHM-P; ARHM-P; BAM-P; DAAM-P; AM-P; ARHM-P; HMKM-P; NGF-P; NSM-P; ZMM-P; SNM- P. 143  BAKM-P; DMYM-P; GZAM-U; HMKM-P; MEWM-P; QYM-P; SNMM-P. 144  JKM-P; MEWM-P; MSSM-P; NANM-P; NUHM-P. 145  AM-P27; NNM-P; SNMM-P; ZMM-P. 146  MM-P. 147  ARHM-P; QYM-P; SNMM-P. 148  ZMM-P. 149  DAAM-P. 150  BAKM-P. 151  MEWM-P. 152  AM-P. 153   AM-P27; ARHM-P; DAAM-P; HMKM-P; NGF-P; NSM-P; ZMM-P; QYM-P; SNMM-P; BHM-P; NAAM-P; JKM-P; MEWM-P; NAAN-P; NANM-P; NUHM-P.

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workers,154 also raising thoughts of terminating the activity155 despite the structuring effects of elements in the field that configure the ability to re-­ allocate or exit (see Sect. 7.1 in this chapter). In other areas apart from production volume, security-related concerns led to postponing plans for expansion or making new investments.156 Companies that had a lifespan of less than four years and were established following the 2014 juncture had also witnessed a gradual decline in activity with each passing year.157 Just three units158 among the cases investigated, although their owners did refer to the rise in political violence in recent years, did not witness a decline in their activities159 or, conversely, saw a rise in their volume of production160—among these, QYM-P and PKZM-P pointed out the importance of personal safety due to criminal acts as more frequently felt by investors in general compared to the overall security threats in the country. Signs of wealth in society presented security challenges that were ‘particular’ in their effect, described in terms such as being seen as rich could entail “difficulties” and “problems”, and could engender “threats” to oneself and one’s family,161 particularly for a woman investor162 due to the androcentric character of the Afghan family structure (see Chap. 3, Sect. 3.5). In three extreme cases,163 the investors experienced abduction or murder attempts (the latter later discovered to have been by a business rival) or were caught in the crossfire during open hostilities. In only one case164 did the unit benefit from some measure of security reassurance from threats by anti-government militants because 950 families with membership in the unit, who belonged to different political sides including the Taliban movement, were said to benefit from the unit (a dairy union). However, an explosion in front of a building belonging to

 HRKM-P; JKM-P; MAAM-P; MM-P; MWQM-P; ZKF-P; NAAN-P.  BAM-P; NSM-P; SNM-P; MEWM-P; MM-P; MSM-P; MZM-P15. 156   AGHM-P; JKM-P; NGF-P; MZM-P15; MZM-P23; SNM-P; DMYM-P; AAMP; AAM-P. 157  FBF-P; FM-P, HKGM-P, HSMM-P, MMF-P, MEWM-P, MSM-P, NANM-P, NNM-P, RHF-P, SNM-P. 158  HSM-P, PKZM-P; QYM-P. 159  PKZM-P. 160  HSM-P, QYM-P. 161  MEWM-P; MTM-P; NSM-P; BAM-P; PKZM-P: MSM-P; MM-P; MAAM-P. 162  RHF-P; MMF-P; ZKF-P. 163  NM-P; NUHM-P; MTM-P. 164  GZAM-U. 154 155

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this unit led to the death of four family members of its president (two brothers and two sons). Subjectively, a sense of “bewilderment” (hairaan bodan)—a sign of uncertainty—and weariness was observed as a result of the gradual developments in the security conditions and political life compared to a previous year or era.165 Such a perception, in rare cases, was transmuted into a normal reality, including in regard to such incidents as suicide attacks166— they were considered as taken-for-granted realities beyond the immediate range of the investor’s control. Non-production-related challenges in the environment of the investment were described in general terms that showed their commonality, such as “living conditions [in the beginning] were not good, infrastructure was not available, opportunities were scarce”,167 “nothing existed”,168 “Afghanistan was war-ravaged and people were extremely irascible”,169 “problems [now] are numerous here”,170 “a general confusion ­predominates here”,171 “a day has come that you cannot even trust your own brother”172 and other such expressions indicating uncertainty concerning the situation in the context, also showing dismay in some cases regarding the future prospects of their productive activity.173 For example, “one cannot trust the situation in Afghanistan” (balaay’e Afghanistan etebaar nes),174as its “future is unclear”.175 An investor had to consider the “lack of guarantees”176 and the prevalent “bad security conditions”177 in Afghanistan when making up her/his mind to invest in its economy. One investor178 stated that the “system” (seestom, i.e. the general attitude among public or private authorities about doing things) is such that it is meant to harm the investment instead of providing help. “These people”  BAKM-P; BAM-P; DMYM-P; NGF-P; MTM-P.  AGHM-P; QYM-P; PKZM-P. 167  AAM-P. 168  HSMM-P. 169  MAAM-P. 170  MEWM-P; MSM-P. 171  MTM-P. 172  QYM-P. 173  MWQM-P; MTM-P; QYM-P. 174  AM-P; ZKF-P. 175  QYM-P. 176  ARHM-P. 177  PKZM-P. 178  BAKM-P. 165 166

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(a vague reference to external actors directly or indirectly relevant to a manufacturing enterprise that can include the government, private sector competitors and the international community) make it intentionally difficult for “an investor” to operate, and investors are treated as if they were “thieves” (dozd).179 A general absence of “encouragement” (tashweeq) or “caretaking” (porsan or tawajo) for the benefit of producers was lamented.180 Afghanistan’s market was categorized as uncertain and lacking stability181 and as having become more “difficult” (moshkel’tar) recently.182 Those who had their operations moved from a neighbouring country (mainly Pakistan and Iran) had a better standard of comparison regarding this, generally of the opinion that Afghanistan’s market was comparatively much less “stable”.183 Among these, JKM-P compared the prevalence of people’s “trustworthiness” in Pakistan to how “everyone in here” (Afghanistan) lie in wait to harm you. He added that “there” (i.e. Pakistan), trustworthiness allowed for delegating tasks without concerns about abuse or misuse of funds, and people were more “humane”, “civilized”, “educated”, “patient”, “content” and “of compliant disposition who didn’t impose their views on you”, qualities that he implied were lacking in Afghanistan. 7.2.2  Elements Attributable to EEA  overnment and Productive Activities G Challenges to producers that originate in the country’s government agencies originated in a) lack of active government support for manufacturing sector, b) corruption and c) dispute resolution and tax system. a) I asked participants about the relationship between government agencies and productive activities, particularly whether any government agency provided information (on imports, consumption level in domestic market, marketing, infrastructure and credit access, etc.) regarding the industry in which they were registering their  BAKM-P.  DMYM-P; GZAM-U; HMKM-P; JKM-P; NM-P. 181  ARHM-P; MAAM-P; NMF-P; PKZM-P; MEWM-P. 182  MM-P. 183  DMYM-P; HMKM-P; JKM-P. 179 180

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business or subsequently during the active period of their unit. No participant said they had received such information from a government agency (or other forms of external agencies such as NGOs) at the point of registration or thereafter. Apart from ‘information-sharing’, no form of regular relationship between the government and the industrial sector was acknowledged in the vast majority of the cases (82 per cent). One-off or occasional contact with a government agency was acknowledged by four participants but in the form of relaying complaints—due to security concerns, access to infrastructure and so on—to encourage government support for the industry of the investor in question.184 An occasional or one-off attempt to establish this relationship had had disappointing outcomes in other cases,185 that is, the requested change in the direction of government policy was not taken into consideration. Some of the ones made explicit by the participants included supportive tariff policies, access to credit, quality control (to boost credibility of domestic ­ products), moral backing of domestically made products among the populace to enhance their image against favoured imports, assistance for access to raw material, assistance in accessing technical personnel, assistance in market access, support of industry through import substitution, government procurement of domestic goods instead of imported substitutes, a change in government bureaucratic procedures to reduce time-delays for the investor, and information-sharing by the government regarding the market for informed resource allocation. Raising import tariffs and providing export promotion as strategies for promoting domestic productive activities did not form part of the government’s policies—supportive tariffs were mentioned in two cases.186 Due to some of the reasons that were discussed in Chap. 4, particularly the role of the IMF, tariffs were not increased on import of items whose partial substitution with domestic prod-

 AAM-P; ABM-P; AMPM-P; HSSM-P.  AM-P18; AMPM-P; ARHM-P; BAKM-P; BAM-P; BHM-P; BM-P; DAAM-P; FBF-P; FM-P; GZAM-U; HKGM- P; HMKM-P; HSM-P; HSSM-P; JKM-P; JM-P; MAAM-P; MAM-P; MEWM-P; MWQM-P; MM-P; MTM-P; MZM-P23; NAAM-P; NANM-P; NGFP; NMF-P; NM-P; NSM-P; PKZM-P; QYM-P; RHF-P; SNMM-P; ZMM-P; ABM-P. 186  AM-P; BHM-P. 184 185

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ucts was possible with existing domestic production capacity, as stated by some investors.187 It was also seen, however, that in rare cases some government policies were advantageous188 (regarding which I had prior knowledge), but that such measures—such as raising tariffs on imports— were not explicitly recognized as a form of “assistance” (komak, the word used for help in general, connoting a non-reciprocal act out of benevolence) and were viewed by one participant189 as the government’s “duty” (wazifa) and an “official responsibility” (mas’oliat) to serve its domestic producers; hence, delivering what was considered a responsibility should not be, accordingly, appraised as a komak. Moreover, these interventions that benefited the industry of some investors in general190 or benefited an individual participant’s unit191 were not part of a government industrial policy and occurred on ad hoc basis, case by case. Government support remained personal/arbitrary, rather than bureaucratic and institutional. Some investors192 referred to the country’s former president Ashraf Ghani’s “favourable views” regarding domestic enterprises, in whose administration’s High Economic Council (a body directly answerable to the president) one producer was a permanent member who participated in its deliberations.193 The main support strategy provided by the government was in the form of giving domestic producers a price advantage over foreign competitors in biddings for government projects based on regulations set by the National Procurement Authority. However, the policy to give price advantage to domestic producers presented its own challenges based on the argument that, to qualify to participate in the bidding process for a government project in the first place, a bidder would need to supply numerous items at once (30 to 40 items according to AM-P18), of which the producer produced only one. Or they had to present a bank statement  AAM-P; AM-P; BAKM-P.  ARHM-P; BHM-P; DMYM-P; NAAM-P; MMF-P; NGF-P; NMF-P; RHF-P; MM-P. 189  ARHM-P. 190  ARHM-P; BHM-P; DMYM-P; NAAM-P. 191  MMF-P; NGF-P; NMF-P; RHF-P. 192  AM-P18; AAM-P; AGHM-P; BAM-P; FM-P; GZAM-U; HKGM-P; HSMM-P; HSMP; JKM-P; NAAM-P; NM- P; NSM-P; PKZM-P. 193  PKZM-P. 187 188

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showing financial capability, a condition beyond the investor’s ability.194 Moreover, foreign service providers who often won in the bidding process preferred to purchase material from their respective countries due to their quality control standards. Even though the government made pronouncements for privileging domestic producers, once a foreign company won a project, it was in their hands to control the subsequent stages, including purchase of raw material and intermediate goods. Following the US-led international military drawdown, producers whose market niche was project-based re-directed attention to securing government projects, which was described195 as a challenge in itself due to the irregularities in project management and the time-delays in making payments. The government’s handling of these projects was appraised as one reason behind declining economic conditions in the recent three to four years.196 A gap between government promises for providing security, infrastructure or land and their implementation was generally a recurring theme; such pledges were not put in place.197 In some cases, government support (of any form) was not solicited at all because of the view that the quality of assistance would not align with these companies’ needs198 or the government was seen as too occupied with its own problems to be able to allocate time and resources for supporting producers. b) Government “corruption” (fesaad) was referred to as a challenge for production in the context199 that could lead to time-delays and financial cost in completing paperwork or carrying out other procedures involving government agencies. Government corruption also manifested in securing government contracts.200 This aspect of the field was reinforced also by investors in the industrial sector that could wield a “mafia-like” power201—such as using collective  NM-P.  DMYM-P; BAM-P; NUHM-P. 196  HSSM-P. 197  ABM-P; AGHM-P; ARHM-P; BAKM-P; DMYM-P; FM-P; HKGM-P; HSSM-P; JKM-P; MTM-P; NM-P; ZMM- P; BAM-P; NNM-P. 198  AGHM-P; ARHM-P; HRKM-P; MTM-P; QYM-P; RHF-P; HM-U. 199  AM-P18; MEWM-P; MTM-P; SNMM-P; MAAM-P; GZAM-U; BAKM-P; AGHM-P; MSM-P; MWQM-P; QYM- P; MZM-P15 MZM-P23; HSMM-P; ZMM-P; SNM-P. 200  MAAM-P; MTM-P; ZMM-P; MAAM-P; MTM-P. 201  MSM-P; MWQM-P; NM-P; MTM-P; MZM-P15. 194 195

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resources for personal use. Most relevant to productive activities was illegal entry of goods from neighbouring countries,202 evading tariffs which allowed for better price competitiveness compared to domestically registered manufacturers who were obligated to pay state taxes. This form of corruption could defeat the purpose of higher tariffs, if levied on import items, because of the possibility of importing through illegal routes. Corruption at customs, affecting some producers, also on occasion led to time-delays and financial costs for importing machinery and raw material.203 c) The state legal system and the role of law enforcement in dispute resolution were not relied on by the investors in the research. The state tax system appeared cumbersome, a “copy paste of American tax system”204 and imported from a foreign country205—the idea that it was a copy of US tax code originated in the view that economic institutions in the post-2001 period had an American stamp on them, making them liable to be considered alien to the context. Companies were required to pay taxes on earned revenues without any concession for infant industries,206 that is, the taxation timeline began with the first earnings. Corporate tax was set at a flat 20 per cent rate without exemption according to article 4 of the 2009 Income Tax Law (Afghanistan Ministry of Finance, 2009). Government tax authorities were feared among ­investors because of the difficulties they could cause207 (one reason for why they were reluctant to participate in the research was also due to this fear—see Chap. 5, Sects. 5.5 and 5.8, for details). One such difficulty was arbitrary estimation of annual revenues208 and, subsequently, a determination of the amount to be paid in taxes regardless of actual earnings. The pressure laid on private investors by tax authorities resulted in time-delays and financial costs. The state tax system also overwhelmingly affected legal employment (e.g. factory workers).

 HMKM-P; MAAM-P; MTM-P; QYM-P.  MTM-P; MWQM-P; NUHM-P. 204  BAKM-P. 205  QYM-P. 206  MEWM-P. 207  BM-P; QYM-P. 208  QYM-P. 202 203

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Other than these areas, non-enforcement of quality standards by the government could lead to time-delays and financial costs because of applying for quality standard certificates from foreign sources209 as well as lower credibility of domestic products, as there were no standards for domestic products for domestic consumers to judge whether to buy the product or not.210 State regulatory enforcement, on the other hand, was encountered in two cases related to labour recruitment211 (the government had required replacement of non-Afghan labourers (Pakistanis) with domestic labourers in what appears to have been a security-related measure) and regarding health-sensitive products212 and demand to limit industrial waste released into the environment.213 I nternational and National Competition Based on EEA’s ‘liberalized’ tariff regime (see Chap. 4 for details), competition had a ‘particular’ effect on industry. The colloquial word for competition in Kabul was reqaabat, a term connoting mainly a conflictual encounter between two or more adversaries, clashing with the communitarian norm as an AIE. The nuanced connotation of competition as an act where benefits can be gained by both the parties involved and which can end harmoniously without the prospect of defeat for any participant is not in-built in the term reqaabat. To tone down the conflictual connotation, the word was adjoined with an adjective and was stated as “healthy competition” (reqaabat’e saalem). Hence, the term reqaabat in trade, whether from imports or domestic products, bore the imprint of its conflictual connotation among the cases investigated by viewing it as essentially negative. To illustrate, in reply to my question regarding reqaabat, a female investor simply replied: “We are all women in this industry”, meaning that we do not have a conflictual relationship aimed at hurting each other’s companies (while they all competed, in the usual sense of the term, in the same market in Kabul city)—the outright conflictual nature of competition would go against the communitarian norm (here reinforced by a gender-based feeling of solidarity). Other investors replied by stating that they have a “good” relationship but also compete (NAAM-P; ZMM-P),  AAM-P; BAM-P; DMYM-P; MAAM-P.  AM-P; AM-P; ARHM-P; HM-U; JKM-P; SNM-P. 211  ZMM-P; QYM-P. 212  JM-P, AMPM-P. 213  ZMM-P. 209 210

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revealing a tendency for competition to be viewed essentially as contrary to a good relationship. “We are like brothers, but we also have competition” (ZMM-P). In addition to trade liberalization, non-payment of customs and illegal entry of foreign goods was the routine manifestation of the challenge related to competition from outside.214 Countries in Afghanistan’s neighbourhood export their products to Afghanistan’s market at a lower price. Domestic producers—usually operating at comparatively lower economies of scale as shown by their estimated net value of assets (see Table A5 in the Appendix)—were less capable of competing with these imports at the same price level. The competition was, therefore, mainly felt in prices. The domestic trade sector is comparatively much larger than the manufacturing sector and has a longer history in Afghanistan, pre-dating 2002 and operating as an instrument of international competition by facilitating it.215 Of the three largest trade partners of Afghanistan—China, Pakistan and Iran—Pakistan and Iran were mentioned by participants for their export support strategies as a form of unfair competition. Pakistan and Iran were said by research participants to provide subsidies to their exporters in a ‘dumping’ strategy (the strategy of flooding an import market with cheap goods by intentionally keeping the price low) or the products from these countries were better packaged than domestic alternatives.216 The challenges associated with competition were reinforced by non-­ enforcement of a domestic system of standards (either by a public agency or an NGO) as a measure to enhance the credibility of a product in the face of imports that were perceived as standardized owing to their origin.217 It was stated by some participants that a prevalent reluctance existed to purchase domestically produced goods, with producers themselves considering domestic inputs as low grade218 or domestic consumers not purchasing “made in Afghanistan” products due to the very reason that they were produced domestically.219 Domestically produced items had, at times, 214  AAM-P; ABM-P; HMKM-P; JM-P; HSSM-P; MAAM-P; MTM-P; NNM-P; SNMP; ZMM-P. 215  HKGM-P; MWQM-P; HMKM-P; NGF-P. 216   ABM-P; AGHM-P; GZAM-U; JKM-P; MMF-P; MZM-P23; NSM-P; PKZM-P; QYM-P; NANM-P; RHF-P. 217  AM-P; SNM-P. 218  AAM-P; ABM-P. 219   AAM-P; ABNM-P; AM-P; AMPM-P; MWQM-P; NANM-P; JKM-P; RHF-P; SNMM-P; ZKF-P.

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been presented with “made in Dubai” or “made in Turkey” labels by companies working for projects whose other principal signatory demanded the use of foreign material,220 the same strategy adopted by others in the market to enhance saleability.221 Consumers were said to compare prices and not quality when making the purchase222 or durability of the consumption period of a product before expiration, which was longer in the case of imports produced in more advanced economies using preservatives.223 Lastly, when consumers were used to a product (overwhelmingly imported goods) it was difficult to make them shift to a domestic alternative.224 International competition was brought closer to home by foreign companies working on the ground in Kabul, competing with domestic producers on biddings for projects.225 This type of competition was perceived as unfair because foreign companies were better placed due to their past profile-building activities for which they had certificates to present—certificates that producers in Kabul did not have and, through a long and arduous process, had to send a sample of their products abroad for testing if they wanted to get.226 Particularly, due to conditions imposed on aid money expenditure by Afghanistan’s international donors back home, certificates documenting the requirements were demanded before hiring a company for service delivery, which domestic companies often did not have. Among the cases investigated, less than a quarter (21 per cent)227 did not face international competition. These participants nonetheless had reported facing competition from domestic companies (companies registered in Afghanistan, majority owned by an Afghan, and selling in the domestic market), which was played out in terms of cost of production, that is, lowering the cost of production allowed for producers to sell at the same or a lower price in the market than their competitor regardless of the

 AAM-P; HSSM-P.  JKM-P. 222  ARHM-P; BAKM-P; DMYM-P; NAAM-P; NAAM-P. 223  GZAM-U. 224  ABM-P. 225  BAM-P; AM-P. 226  BAM-P. 227  BAKM-P; DMYM-P; HSMM-P; ARHM-P; DAAM-P; MZM-P23; FBF-P; MM-P; NAAM-P; SNMM-P; NM-P. 220 221

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effects of such a strategy on the product’s quality.228 This was referred to as “unhealthy competition” (reqaabat’e naa’saalem)229 or “negative competition” (reqaabat’e manfi).230 As explained by SNMM-P, a company might initially produce better-quality products (requiring higher cost of production) to garner a good reputation, and once this was attained, resort to cost- saving as a competition strategy, which led to decreasing quality (concealed by the good reputation). In this type of competition prices were set in the open domestic market—although inter-industrial meetings were mentioned as a platform for establishing a harmonious relationship231—without effective quality monitoring by the state232 or other quality control standards.233 As such, adjusting quality by lowering cost of production and using cheaper raw material was reflected in more competitive market prices. The evidence among investors suggests that this was the predominant strategy of competition among producers in Kabul. The shift to lower quality was particularly challenging for producers who previously dealt with high-­ paying customers requiring high-quality products, whose production machinery and organizational capacity, including technical expertise, had been tailored accordingly, dealing mostly with coalition forces and international civilians (most of whom left Afghanistan towards the end of 2014). For these, competing in the domestic market would require reconfiguring the enterprise and its assets entirely. The other strategy categorized as “unhealthy competition” was to directly subject a rival’s product to bad publicity by word of mouth.234 Market relations being highly personal (see Chap. 8, Sect. 8.4), direct verbal communication with clients functioned as a marketing strategy to the benefit of the communicating producer and, in a non-market competition, to the disadvantage of rivals who were not present or did not have this level of close relationship with the same client(s). DP sales and ograyi were also used as instruments of competition by which competitors supplied finished goods to customers without asking for payments on the spot 228   ARHM-P; DMYM-P; GZAM-U; HSMM-P; HSM-P; JM-P; MAAM-P; MM-P; NAAM-P; QYM-P; SNMM-P; ZMM-P. 229  ARHM-P; BAKM-P; DMYM-P; MAAM-P; MM-P; QYM-P. 230  HSMM-P; MAAM-P; NAAM-P. 231  AM-P; AMPM-P; ARHM-P; BHM-P; BM-P; HKGM-P; HSSM-P; MMF-P. 232  ARHM-P; GZAM-U. 233  JM-P; JKM-P; AM-P18. 234  AGHM-P; AM-P18.

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to outcompete other sellers who asked for a higher percentage of the initial value of sales or an upfront payment of the total value.235 A buyer (retailer or wholesaler), then, was better positioned financially with a producer who was willing to adopt ograyi and DP sales. Domestic competition was not evidenced in cases where a domestic industry was populated by a few competitors who collaborated with each other,236 one large company enjoyed a brand reputation237 or the company was the only one of its kind in the country.238

7.3   ConcLusion Due to the workings of the elements of the field discussed in the first section, the investors to a large extent were bound to the production unit in a way that limited re-allocation or exit in significant ways following entry. While the practical knowledge of manufacturing transmitted through habitus and regulated by AIEs embedded mainly in the family structure had led to the decision to enter the sector in the majority of the cases, the decision to stay in the sector or the particular industry within, while being continuously shaped by the habitus’ dispositions, was also conditioned by the physical constraints that this activity is seen to involve, and the social status and symbolic capital that accrued as non-material aspects of being a producer. Constituting the production field, it was through the investor habitus’ encounter with these elements that adaptive strategies to ensure continuation of their unit developed (see Chap. 8). Related to asset specificity, the type of machinery used in a unit secured by the investor—according to the type of commodity the investment was intended to produce—set limits as to the ability of the investor to retrieve part of the initial cost if (s)he wished to re-allocate assets or exit the sector. In the majority of the cases, the assets were specific to the investment and transfer of capital to other sectors by the investor by closing the current manufacturing unit involved in financial loss. Remaining in the industry and keeping some level of production volume, therefore, appeared less costly in comparison. The relationship between the producer and the buyer (either retailer or wholesaler) was seen as characterized by the  ARHM-P.  BHM-P; HKGM-P; HSM-P; MEWM-P; NANM-P. 237  DAAM-P; NNM-P. 238  NMF-P; NUHM-P. 235 236

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predominant habit of sales on ograyi or DP in general, dispersing the producers’ circulating capital in many open accounts, and re-allocating or ceasing the productive activity involving the unravelling of the person-toperson sales relationship with clients, which, as its most significant outcome, reduced the likelihood of retrieving past dues. The activity led to distinctions in social status, accruing a cultural capital, which was tied for its preservation to the productive activity, while affinity to the community and the ‘homeland’ formed the symbolic capital by emphasizing that manufacturing requires physical commitment to one’s homeland as against trade and services, which are less concrete and more likely to turn into liquid form. This functioned based on a disavowal of the material domain of production but based on it in its objective reality. The second section narrowed the focus by constructing the two elements of the field of production that paralleled the two determinants ‘1’ and ‘2’ as discussed in Chap. 1. These parameters, recognized as “challenges” (janjaal or moshkelaat) by investors, lay in the political economy of the context and, from among myriad challenges that could exist in the environment, were cited more recurrently by the producers with respect to their activities. It was seen that related to the QPS ‘inter-sectoral vertical expansion’, the sector due to its physical and non-physical constraints, and the elements existing in the political economy of the context, had not grown structurally significant. As structured by habitus’ practical knowledge, the observance of the emerging possibilities for deciding where to invest, that is, the tendency to take advantage of backward and forward linkages, was less common among the cases (it almost did not exist apart from one case239 which was established expressly to produce intermediate goods for use in other industries). As the data on access to raw material indicates, the majority of manufacturing units sourced their raw material or technically sophisticated components (e.g. chemical additions) from outside or purchased them from importers.

239

 HSM-P.

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References Afghanistan Ministry of Finance. (2009). Income tax law. Retrieved August 09, 2017, from https://mof.gov.af/sites/default/files/2019-­02/Income-­ Tax-­Law_0.pdf Chang, H. J. (1996). Political economy of industrial policy. Macmillan Press. Fund for Peace. (2014). Fragile states index 2014. Retrieved June 07, 2017, from https://fundforpeace.org/wp-­c ontent/uploads/2014/06/cfsir1423-­ fragilestatesindex2014-­06d.pdf Nee, V., and Swedberg, R. (2005). Economic sociology and new institutional economics. In C. Menard and M. M. Shirley (Eds.), The handbook of new institutional economics (pp. 789–819). Springer. North, D. (2005). Institutions and the performance of economies over time. In C.  Menard and M.  Shirley (Eds.), Handbook of new institutional economics (pp. 21–30). Springer. Special Inspector General for Afghanistan’s Reconstruction. (2018). Private sector development and economic growth: lessons from the US experience in Afghanistan. Report. Office of the SIGAR, April. Retrieved March 02, 2019, from https://www.sigar.mil/pdf/lessonslearned/SIGAR-­18-­38-­LL-­ Executive-­Summary.pdf Swartz, D. (1997). Culture and power; the sociology of Pierre Bourdieu. The University of Chicago Press.

CHAPTER 8

Data Analysis: Habitus and Adaptive Strategies for Enterprise Continuation

Building on the preceding chapters, this chapter explains the structuring effects of habitus on governance structure inside the units investigated. This effect came to bear on two sets of decisions that both implicated the authority figure (the owner): (a) routine decisions regarding the unit’s operations and (b) decisions regarding scale of production. The former could include such mundane issues as giving orders to workers and line managers, ensuring the timely delivery of raw material, first-hand supervision of the production process, taking orders and contacting relevant individuals outside the business, maintaining discipline and solving grievances, and small payments and making sure end-products are properly stored or delivered to customers. These were the typical managerial duties that were needed to sustain the productive activity and could be delegated. The second set of decisions pertained to the issue of scale, requiring larger expenditure. This could include purchase of new machinery, selling off assets, shifting the source of raw material or hiring (dismissing) labour in a way affecting scale, securing credit, and generally such areas regarding which decision-making could not be delegated—the authority figure had to be informed and be the person giving the final order as it was him/her who would incur the cost. Both these sets of decisions—taken with the effects of habitus—were related to how inside and outside the units, adaptive strategies developed for investment continuation. I use the terms ‘adaptive strategies’ and ‘continuation’ with a particular meaning in this context. The word ‘adaptive’ typifies a process involving © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 K. Rafi, Patriarchal Hierarchy, https://doi.org/10.1007/978-3-030-98407-6_8

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an investor’s responsiveness vis-à-vis the production field by pre-­reflectively reproducing the structures of governance inside a family unit—to endow the unit with the capabilities required to fit in and continue its operations. ‘Strategy’, on the other hand, refers to some degree of conscious intent (or interest) to achieve this fitting in purpose on matters of daily concern both as part of the dispositional potentialities within her/his habitus, its fundamental form seen in the governance structure, and in conscious computation. The term adaptive strategy, as such, refers to an ongoing process that was primarily a product of the investor’s habitus and, by being placed within the logic of the objective field of production—where some estimations of the resources and the systems of distribution (material and cultural) were accessible to her/him—a degree of conscious calculation enters the decision-making process due to the crisis-ridden nature of the context. The main purpose of adaptive strategies can be summarized around one interest, namely, the expeditious adjustment of cost of production. Hence, the adaptive strategies regarding routine and larger questions were undertaken based on the habitus’ structuring effects to ensure investment continuation by expeditiously adjusting cost of production. I should point out that the word ‘strategy’ might say more than what its formulation and execution in contingent and constantly shifting tangible form looked like in the context—a detailed examination of which would have required anthropological investigation that fell outside the scope of this book. A coherent planning and long-term delineation of costs, benefits and objectives—components of a strategy based on a “calculative” approach—was supplanted by habitus by frequently rearranging resource allocation in response to regular or drastic events in the field or the political economy of the context. In practical terms, the official formalities of devising a strategy were likely to be replaced by ad hoc and irregular interaction between the authority figure and other members of the enterprise in a manner similar to the family structure. The mode of communication most often relied on verbal face-to-face commands. The term ‘strategy’, therefore, should be read as an amorphous general orientation that had developed to adapt the enterprise’s continuation to this field, and not as a rational-bureaucratic process. Use of the term ‘continuation’ tends to evoke a sense of duration in time, the timespan of adaptive strategies as related to their outcome, that is, the continued perpetuation of the productive activity. It might help to distinguish this processual outcome from the term ‘survive’, which alludes to the act of pulling through a temporary adversity or succession of

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temporally determinate events that could undermine the life-chances of the ‘surviving’ object. By continuation, on the contrary, I do not imply dealing with conditions that potentially or actually entail this adverse integral content, but point to an unceasing dialectical encounter with the elements of the field—much like iron being hammered by a blacksmith that takes a particular shape but continues to serve a purpose. In this chapter I examine the structuring effects of habitus on governance structure of the units and, subsequently, the following three adaptive strategies that I identified among the cases: (1) labour recruitment, (3) production modality and (4) relationship with clients. It should be noted that these adaptive strategies had developed relative to the elements of the field—though not in a relationship of homothetic correspondence with them in the sense of solutions to particular challenges as part of ongoing organizational planning. The AIEs I applied to analyse the data in this chapter were: (1) trust, (2) NNN, (3) obeisance and (4) prudential production. The chapter’s conclusion establishes the implications of the adaptive strategies for the QPSs ‘impersonal exchange’ and ‘bureaucratic governance’ as an indicative measure of the manufacturing sector’s importance in the context.

8.1   Governance Structure Governance structure in manufacturing units was predominantly personalistic1 (authority concentrated in one person) as against organizational/ bureaucratic, showing a top-down hierarchy. Governance itself being an 1  To use Screpanti’s (1999) classification, the economic system in Kabul (and Afghanistan) closely aligns with classical capitalism. Screpanti uses the Property Rights Regime (the normative, transactional and behavioural institutions that regulate the distribution of wealth and surplus value) and the Accumulation Governance Structure (institutions regulating capital accumulation) to distinguish between different stages of a capitalist economy. In the classical version of capitalism characterized by concentrated private property, wealth is owned by a few who belong to a specific class, that is, the bourgeoisie. And individuals falling under the workers’ class own no property in the production process. Similarly, accumulation governance structure is linked to the ability of entrepreneurs to survive in the market or see a setback or, worse, face bankruptcy. The accumulation process, that is, the process by which capital, through productive uses and profitability, is valorized and grown larger, is thus managed by the entrepreneur and its costs borne by him/her personally. This is contrary to the elaborate institutions in a modern capitalist economy which regulate accumulation and where there are multiple levels of distinction between owners (shareholders) and those in control of decision-making (officers and directors). Based on these two criteria, the second-

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adaptive strategy, this form of decision-making structure was patterned along a patriarchal family hierarchy to a large degree homologous in structure. The role of the authority figure in the family and the deference towards his station by family members was supplanted by the owner as the authority figure, with the same deferential attitude towards him/her by the administrative staff, superintendents and manual workers in a production unit. The ‘chain of command’ was characterized by the authority figure occupying the top position, conveying orders to workers directly or through a superintendent. The bond of consanguinity in the family unit was replaced here by a bond that was primarily characterized by necessity, that is, the owner needing the labour force of the worker, and the worker needing the livelihood opportunity to sustain her/himself and her/his family. This bond, unlike the familial bond established by nature, was established with the wage the owner agreed to pay the worker. The AIE regulating the behaviour among the owner and the workers was based on the norms of behaviour as dominant in a family unit absent the emotional commitment. Governance of the unit related to the two sets of decisions displayed practical differences, more clearly observed in the extent to which the decision required the physical attendance of the decision-making authority in the unit, as well as the frequency of a decision. Decisions regarding routine processes required physical attendance and if the main authority wished to execute them, (s)he would need to visit the unit and be present in it in person. These types of decisions were relatively more numerous and frequent. Decisions regarding larger matters, despite their potential for generating cost and heightened vulnerability to particular elements of the field, could be taken without the physical attendance of the authority figure. They were, moreover, by nature relatively infrequent. Among the cases, delegation of decision-making regarding the second set of decisions (i.e. larger matters) was mostly uncommon. Some delegation was observed regarding the first set of decisions; the decision-making task was handed over to someone else to supervise. In a vast majority of the cases, however, both types of decisions were taken by the authority figure. This exposed the decision-making modality and process to the effects of the authority figure’s habitus, which was seen in the majority of the cases to have configured the internal hierarchy of the enterprise as a non-differentiated ary sector in Afghanistan behaves as a classical capitalist system where those who claim residual rights (owners) also control the enterprise and appropriate the residual income.

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system, transmitting a unitary top-down approach to decision-making power that is already widely present in the context in the form of the ‘mega-structure’ family. The origin of this personalistic governance structure in Kabul’s secondary sector can be found in the structuring effects of the investor habitus—given that other intervening institutional transfer of managerial and decision-making methods was not discerned. This adaptive strategy was underpinned by a sense of caution and prudence for personal wealth as a personal duty (towards the family, the community and even religion—see Chap. 3 Sect. 3.5, for details). The AIE ‘prudential production’ was the main regulating norm for this adaptive strategy for continuation, that is, a strategy that could have developed by the investor as part of the everyday encounter with the field. The providential viewpoint underlying prudential production can be observed in four-fifths2 (80 per cent) of the participants, who used common colloquial expressions pointing to a providential hand in reference to their investment or the current state of their wealth: “Whatever God has given us”,3 “Whatever God has seen fit to bestow us with”,4 “Everything belongs to God and we’re its temporary custodians”,5 “God gave me the idea to invest”,6 “This property is first God’s and then mine”,7 “Firstly, I put my trust in God and began from nothing, …, God helped me find a few machines”,8 “We do not despair and think of ending the unit as we are in God’s hands and it is my belief that God does everything”,9 “We do [acknowledge and] send prayers to God for seeing us as worthy of this bounty but we do not consider ourselves rich … we only put our trust in God”.10 Prudential production as a strategy, based on this tendency of habitus, followed the prevalent belief regarding the source of wealth, squandering of which might be perceived as disregarding God’s ‘good 2   AAM-P; ABM-P; AGHM-P; AM-P27; AMPM-P; BAKM-P; BAM-P; BHM-P; DMYM-P; FBF-P; FM-P; GZAM- U; HKGM-P; HMKM-P; HM-U; HSMM-P; HSM-P; HSSM-P; JKM-P; JM-P; MAAM-P; MAM-P; MEWM-P; MM-P; MSM-P; MTM-P; MWQM-P; MZM-P23; NAAM-P; NANM-P; NGF-P; NMF-P; NM-P; NSM-P; NUHM-P; QYM-P; RHF-P; SNMM-P; ZKF-P; ZMM-P. 3  BAKM-P. 4  ABM-P. 5  HKGM-P. 6  HSM-P. 7  HSSM-P. 8  MAAM-P. 9  MWQM-P. 10  NSM-P.

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will’—also, as a more tangible outcome, it could threaten the livelihood of the participant and her/his family. The personalistic form of governance and the level of hands-on involvement it required—as against delegation—served two important outcomes: a) personnel costs (wages) were reduced because the investor her/himself performed the roles attributed to managers of finance, quality control, administration, marketing, logistics and other branches in a company, and b) physical attendance by the investor ensured that production scale was quickly readjusted based on the perceived or actual changes in the elements of the field. While the first outcome was self-evident, the second outcome based on the analysis here was realized in three important ways: (1) labour recruitment, (2) production modality and (3) relationship with clients. Cases where decisions on routine affairs were entirely handed over to a ‘general manager’ (a superintendent who replaced the authority figure but played a personalistic role as well) comprised less than one-tenth11 (8 per cent) of the units investigated. Among these, the top-down personalistic hierarchy persisted but the owner her/himself did not handle the routine affairs of the company (except MSSM-P who worked six hours per day in the unit) and had handed it over to a ‘general manager’ (i.e. a superintendent). These units had other managerial operational divisions for finance, marketing, quality control, administration and production supervision. Given the size of these units (they were the four largest among the cases in terms of estimated current value of assets and circulating capital in their industries (see Table A3 for details), the top-down hierarchy had evolved into a relatively complex set of managerial configurations. In some other relatively larger units in the study12 some division of labour was seen regarding the routine affairs in the company management in the areas of financial management, production supervision, technical expertise, administrative coordination and marketing. One distinction these units had with the four units mentioned above was that, among the latter, the authority figure (i.e. the investor) was physically present and handled both sets of decisions. The managerial sub-units, hence, were not decision-makers in these cases, had auxiliary roles in the company, and were there to handle the kinds of work (e.g. production monitoring,  ARHM-P; JM-P; MSSM-P; NNM-P.   HKGM-P; MM-P; AMPM-P; MEWM-P; SNMM-P; MAAM-P. 11 12

NAAM-P;

HSM-P;

PKZM-P;

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paperwork, financial coordination) that the investor him/herself did not have the time or the competence (such as when they were illiterate) to perform. Some companies had a less complex management body and only employed a “chief clerk” (modeer)13, a person who handled paperwork. In others, division of labour in the management had developed in the form of an assistant to the main authority figure, an amorphously demarcated area of responsibility who played more or less the same role as an elder member (the elder son most often) plays inside a family. This assistant was not in charge of decision-making power within a branched out bureaucracy inside a unit but functioned as the ‘right hand’ of the main authority figure. Other than this, handing over decision-making power to technical personnel and the generation of sub-entities inside the unit in charge of performing specialized duties—as a sign of division of labour within the management of the unit—was not observed. This personalistic hierarchy of decision-making applied to single-­ owned, partnership, family-owned and union-based enterprises. In single-­ owned enterprises, the decision-making process for both larger matters and routine management was personalistic, that is, decision-making power rested with the same person who also claimed ownership of the company.14 This individual went to the unit daily, supervised all areas of production personally (stopping short of her/himself engaging in manual work) and dictated the details on the spot. In companies with this form of ownership, division of labour to bring organizational differentiation (in the sense of organic evolution of a unit to relegate tasks to specialized sub-­ units) extended to asking for non-binding occasional input from those who were directly in charge of performing the duty at hand (a line manager or a worker in charge of a task).15 The consultative role in this sense was seen in a line manager or worker wielding influence in decision-­making on routine affairs of production due to them having intricate practical knowledge of techniques of work in some specific domain of production. The owner, broadly knowledgeable about the details of work, nonetheless consulted on small details.

 ABNM-P; AM-P27; BM-P; NANM-P.  DMYM-P; JKM-P; MSM-P; NGF-P. 15  AM-P18; AMPM-P; BAKM-P; BM-P; FBF-P; FM-P; GZAM-U; HKGM-P; HMKM-P; HRKM-P; MSM-P; HSSM-P; JM-P; MEWM-P; MM-P; MZM-P23; NANM-P; NMF-P; SNMM-P; ZKF-P. 13 14

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This consultation also extended to internal16 or external17 advisors other than the line manager or the worker. In these instances, control over decision-making regarding both the routine affairs and the larger issues in the company nevertheless rested with the investor. In partnerships, control over decision-making pertaining to larger questions in the unit was taken through ad hoc meetings between the partners who met face to face and jointly deliberated on the decision. But regarding routine affairs of the production process, control over decision-making followed the above pattern of a single-owned enterprise. One partner controlled routine processes inside the unit by attending to every detail of production in person, physically visiting the unit on a daily basis.18 In family-owned enterprises, questions regarding larger matters were dealt with through negotiation between the family member in charge of routine activities (a male member among all the cases investigated) and the person who was the tutelar head of the company and the family (father or elder brother).19 In other family-owned enterprises where the tutelar head was personally also in charge of routine activities, decision-making regarding larger questions happened after consultation with other family members to seek advice.20 In family-owned units, the transmission of top-­ down patriarchal norms of control (commonly by the father but also the elder brother) with respect to important aspects of the unit was more direct given that the investment was, in effect, a family concern and was not distinguished from it. Finally, the top-down hierarchy was replicated even in the case of the units which officially were considered a ‘union’21 (the unit had a different governance structure but only to the extent of the ownership claim of the union itself, which officially rested with 15 dairy cooperatives) or ‘association’22 (a collective made up of 34 honey processing enterprises). The internal operations of these units were arranged the same way as in single-owned units.

 DMYM-P.  AGHM-P; AMPM-P; MSM-P; MMF-P. 18  AAM-P18; AM-P27; BM-P; FM-P; HSMM-P; MAM-P; MZM-P15; NUHM-P; QYM-­ P; RHF-P; ZMM-P. 19  ABM-P; ABNM-P. 20  ABNM-P; AM-P18; BAM-P; BHM-P; DAAM-P; MAAM-P; MEWM-P; MTM-P; MWQM-P; NAAM-P; NM-P; NSM-P; PKZM-P; ZKF-P. 21  GZAM-U. 22  HM-U. 16 17

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In the majority of the cases investigated (61 per cent), the same person owned the unit and managed the main areas of finance, marketing, administrative coordination and production supervision. Except for the four aforementioned cases in which a general manager made decisions on routine affairs, in 92 per cent of the cases the owner handled the unit’s operations first-hand by being physically involved. Governance of the company, hence, was predominantly personalistic with only a consultative role for line managers or workers tasked with specific duties in some units. The hands-on involvement in the company’s operations was also observed in the number of hours per day that made up an investor’s production-­related work. This was the average number of hours spent for work, usually when spent within the company premises but also, in some cases, the hours spent to and from work. Work hours for an investor were not strictly delimited during the day, meaning that the work day did not have a set time to begin and end and could cover 24 hours, with a steady pace interrupted by high work pressure. On average, 73 per cent of investors spent 10.2 hours on work per day. Among these, I did field visits to 12 companies during the month of Ramadan (16 May 2018 to 14 June 2018), during which working hours were reduced for religious purposes (and these were the work hours mentioned during the interview). As such, the average working hour for the investors might be higher than 10.2 that of normal times. The number of work hours ranged between 7.5 and 16 hours per day, with a median and mode of nine hours. Among the remaining 27 per cent of the units, six investors23 did not make the number of working hours explicit and described it in such terms that indicated a change of life routine, and more time dedicated to work after investing in production compared to a previous job, suggesting inability to delegate tasks in the company and being personally in charge of all its details. On the other hand, female investors in the sample dedicated on average five  hours per day to work (with one exception who claimed to spend 18  hours on work, which seemed an exaggeration because it leaves six  hours for sleep and other daily activities). The reason why women investors worked less than men was that they also handled other affairs at home in addition to running the investment. These home tasks fall, for cultural reasons, within the domain of women’s unpaid household employment. In general, the andro-centric hierarchy of a family was reproduced  AM-270318, BM-P, HM-U, HSM-P, MSM-P, NM-P.

23

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in manufacturing units discernible mostly in the absence of even a consultative role for a woman employee—if they had women employees (not the case in the majority of the units). Of the cases with a male owner, none had women involved as a decision-making authority. Of the female owners of units investigated, one’s husband had died and her earnings from the investment were mainly used for the purpose of educating the only male member still remaining in her family (her son), two mentioned non-family male individuals as important advisors who have a significant role in decision-­making despite not being the legal owners themselves (their role was spontaneously mentioned without my probing), and another’s husband and son now had decision-making roles despite not being involved in the beginning in setting up the unit (in fact, the husband played a dissuasive role). Only one did not explicitly mention a husband, a son or another male individual involved in the decision-making. In another indication of the reproduction of the family structure inside the unit, the domain of menial work and the domain of control inside the factory, one associated with workers and the other with the authority figure, were separated in ways analogous to the family. The employer’s office was usually in the same compound as the production unit, but a distance was maintained between it and the workshop where workers were placed— also common in how a family is set up where the domain of menial jobs and chores inside the house is centred around the kitchen and handed over to the women to handle, to which a man’s entry might be perceived as ‘unmanly’. To a degree that was less laden with gender-based differentiation in division of labour but influenced by the association of menial work with a comparatively less respectful role, the environment of work and production was relegated to workers. A worker representative functioned as the link between the two separate domains of ‘control’ (the office where the owner and the management sat) and ‘work’ (the workshop and production station). This was almost universal in all the factories visited for the research, except for cases in which technological capacity had resulted in a higher necessity for technical labour and a concomitant readjustment of their role as educated individuals, who were more worthy of respect. The personalistic governance structure in the majority of the units can be attributed to the tendency for hands-on involvement in the routine activities of the firm, being physically present to monitor the production process and manage the day-to-day affairs of the company and the larger questions pertaining to expansion or downsizing. The overlap between

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the social domain of family and professional activity was further blurred by the frequent mentioning of ‘family’ by participants as the source of help for setting up the unit and when met with a difficulty through the lifespan of their activity—nearly four-fifths of the cases. Among the routine activities of the units based on data were personalistic governance-structured labour recruitment, modality of production, and client relations as components of the adaptive strategy for continuation through expeditious cost adjustment. I discuss each area separately.

8.2   Labour Recruitment Labour—hired workers other than the investor—remained the main component of cost of production for manufacturing units because the sector was predominantly ‘labour intensive’ (the labour and capital ratio tilts starkly in favour of labour in the production process) (refer to Chap. 5, Sect. 3.5, for elaboration). Adjusting cost of labour with frequent rise or fall in the activities of the unit in response to gradual or sudden changes in the elements of the field formed part of the adaptive strategy for continuation. Adjustment of labour cost was carried out in the following three ways: (a) Labour precarity: unencumbered rapid dismissal of the work force at short notice (b) Arbitrary pay scale: irregularity among the cases investigated in the range between the lowest pay and the highest pay (c) Arbitrary work hours per day: decided based on the volume of work by the investor rather than following a set schedule The AIE ‘obeisance’ in the governance of units was patterned along a top-down family hierarchy, except that in the case of units the emotional commitments were absent. In a family unit, those serving the family (members) strive for its continuation through obeisance and deference towards the authority figure. The treatment of non-members (servants) is in the form of auxiliaries and supplements towards achieving this objective. They also do not have the emotional privilege of family members and their contact with the family is transitive and ‘changeable’. Moreover, the codes regulating relationships in a top-down family are non-contractual and ad hoc (i.e. give-and-take in a family being based on a natural bond and not contracts), which was seen to be the tendency that also shaped

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how labourers’ work hours, pay scale and recruitment were decided on a non-contractual and ad hoc basis in the absence of other legalistic impositions by a coercive agency (the bureaucratic agencies of the state). 8.2.1  Labour Precarity Because of the difficulty in measuring ‘labour precarity’ in the context, the method I relied on to derive this information suggests the inability by participants to give the exact number of workers they employed at the time the interview was taken—more than three-fifths.24 They gave “approximate” (taqriban) or “estimated” (dar hodood) numbers. This may have to do with the habitus’ effect of viewing such a matter as not within the principal domains with which the investor her/himself should bother, leaving it instead to the superintendent to deal with. The same structuring effect can be seen as evidence of the unimportance of labour force numbers given its continuously changing state. Among the cases, some25 explicitly pointed to the labour numbers being subject to frequent “change” (taghir)—the frequency rate being subjective26—or that there were categories of labourers whose population was not stable. A little more than a quarter27 of the participants were able to give an exact number of workers hired at the point of interview, of whom 70 per cent hired less than 20 workers. Some among these28 also referred to labour numbers as frequently changing. Referring to labour force numbers in estimates was one indication that suggested, among other things (e.g. record keeping being uncommon), frequent changes in the actual number of workers a unit hired. Labour precarity was observed more clearly in the cases where a core group of work force, whose

24  AAM-P18; AGHM-P; AM-P18; AMPM-P; ARHM-P; BAKM-P; BAM-P; BHM-P; BM-P; DAAM-P; DMYM-P; FM-P; GZAM-P230718; HMKM-P; HRKM-P; HSMM-P; HSM-P; HSSM-P; JKM-P; JM-P; MAAM-P; MEWM- P; MZM-P23; NAAM-P; NM-P; NNM-P; PKZM-P; QYM-P; SNMM-P; SNM-P; ZMM-P. 25  BM-P; DMYM-P; HKGM-P; HSSM-P; FM-P; HMKM-P; HRKM-P; JM-P; MAAM-P; MEWM-P; MWQM-P; NNM-P; NSM-P; QYM-P; SNM-P120718; ZKF-P. 26  Broaching the participants’ conception of “frequent” lay outside the scope of the research. 27  ABM-P; ABNM-P; FBF-P; MAM-260818; MM-P; MSSM-P; MTM-P; MWQM-P; MZM-P15; NGF-P; NMF- P; NSM-P; NUHM-P; RHF-P; ZKF-P. 28  MWQM-P; NSM-P; ZKF-P.

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population was known in relatively more precise terms by the investor, was kept in the unit longer than the others (mostly manual workers). The other indicative sign of labour being precarious was the uncommonness of legal procedures for recruitment, that is, the process was devoid of such formalities as taking an official interview, extending a work offer, signing an agreement and a formal resignation procedure. The decision on this was taken by the authority figure without a legal constraint in the form of performing some binding formal ceremony or signing a “contract” (qaraar’dad), to determine the terms of employment between the worker and the company. Laying off workers, therefore, was not encumbered by an employment qaraar’dad, verbal or documented (where the latter existed). A contract or qaraar’dad here represents a mere reference by participants indicating mostly a verbal ceremony (a conversation regarding the terms of work with the worker as they were mostly illiterate) to hire and should not be construed as a guarantee of employment or another legal form of employment security (I use qaraar’dad hereafter to avoid the misunderstanding that the word contract might induce). Based on a personalistic governance structure and top-down hierarchy, a legally defined recruitment procedure that requires enforcement by a state agency did not fit within the habitus’ practical knowledge considering the importance of non-pecuniary relations inside the family structure in the context. Related to the verbal qaraar’dad, I divided the units into: 1. Those who practised this form of pre-recruitment verbal agreement with workers29 (21 per cent) 2. Those who did not follow this formality30 (30 per cent) 3. Those who partially31 practised this formality32 with some categories of workers (31 per cent)

29   AM-P18; ARHM-P; HKGM-P; HSMM-P; MAM-P; MMF-P; MM-P; NAAM-P; NAAM-P; NSM-P; NUHM-P. 30  ABNM-P; AM-P27; BAKM-P; FBF-P; FM-P; HMKM-P; HM-U; HRKM-P; HSM-P; HSSM-P; JKM-P; MZM-P15; NMF-P; SNMM-P; SNM-P. 31  The extent of this partial long-term or contracted labour and non-contracted item-based labour was not researched due to reasons of scope. 32  AAM-P18; ABM-P; ARHM-P; BAM-P; BHM-P; DAAM-P; DMYM-P; GZAM-U; JM-P; MAAM-P; MSM-P; MTM-P; NNM-P; MEWM-P; PKZM-P; ZMM-P.

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4. Those in which a relative move away from casual to more formal recruitment based on monthly payment—as against “irregular pay” (ojoora)—was observed33 (17 per cent) Labourers hired on a “monthly” (maah’waar) or “long-term34” basis (dayemy) were relatively stable and did not hold the same status as “temporary” (maqta’yi) workers, the latter hired for item-based or dailybased assignments. Commonality of temporary labour constituted an important indicator of labour precarity based on which companies35 hired a worker to produce an item whose payment was determined according to the aggregate number of items (s)he produced regardless of the unit of time. This type of employment terminated when the needed number of items was produced. This was also observed in temporary work “per task” (ejaara or teeka) to perform a set duty in the production process (in whatever amount of time it took) and be paid according to a prior qaraar’dad.36 Temporary recruitment was also observed for workers hired on a per day basis37, who, similar to the item-based workers, remained in employment for the required number of days the unit needed their labour. In one outlier case38 workers were hired on a relatively long-term basis, who were said to have 24 days annual leave, 10 days of sick leave, a week of leave on their marriage, and 3 days leave for funerals of blood relatives. They were also paid for treatment of injuries on duty.39 This company had an on-site non-Afghan general manager in-charge.40 It was also the largest unit based on estimated current value of assets among the companies investigated—one of the largest domestic companies in Afghanistan during 2001–2021. In this unit, the pay scale was not arbitrary and was commensurate to the job categories under which workers were hired and paid 33  AMPM-P; AGHM-P; MSSM-P; MTM-P; MWQM-P; MZM-P23; QYM-P; RHF-­ P; ZKF-P. 34  This is a subjective concept, meaning that “long-term” could mean a few months to a few years, or it may have been based on the personal bond between the producer and her/ his employee, which to her/him seemed immune from short-term alteration. The measurement of long term in quantitative terms was not part of the research. Here, only a qualitative reference to this term is used. 35  ABM-P; BM-P, FBF-P, HRKM-P; NGF-P; SNMM-P; ABM-P. 36  ABNM-P; DAAM-P; SNM-P120718; HRKM-P; MEWM-P; NM-P. 37  AM-P27; FM-P; NMF-P; NNM-P; MEWM-P; HMKM-P. 38  ARHM-P. 39  MSSM-240618 too had this facility. 40  The permission for the marketing manager to sit for the interview was granted by him.

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accordingly. The recruitment procedure in this unit went through formal application, shortlisting and in-person interview before a worker was hired. Every worker had a three-month probationary period before being admitted as a long-term employee. This level of precision, specific steps that determined the qualification of a labourer for the intended task, was not observed in other cases. In some units the labourer’s qualification was improved on the job. The initial stages of work, which could take days, weeks or months, involved a learning process.41 In such units, frequently hiring and dismissing new workers would require replicating the learning process. Among the cases, legalistic institutions, namely government labour law and unions promoting them, if practised, did not impinge upon the top-­ down hierarchy of governance in production units that were transmitted through the individual habitus—a structuring structure much more actively present when it comes to managing routine affairs of the unit. In three outlier cases42 the existence of some form of relationship with a labour union (a remnant of the pre-1990s period of war) was acknowledged, but this union was said to exist mostly in name. Among these, one investor acknowledged a one-time visit by representatives of the union who promised to return and enlist his workers, but he believed that “such things are new in Afghanistan”, that Afghanistan is a “war-ravaged country”, and that a labour union is an organization that is common in “other worlds” (presumably meaning economically and socially advanced societies). In other cases when the answer to this question was given with some detail (in the negative), the existence of any contact with a labour union was not acknowledged.43 It was said that the union existed but was practically irrelevant, considered alien to Afghanistan’s context with the reasoning that “workers are poor people and don’t want to get mixed up with such things. They simply want to earn a living”.44 In another case45 the idea of a labour union was associated with workers being “educated” and of a better social standing than the workers his company hired who were “ordinary people” and content with what they received from the company. Similarly, ARHM-P put the idea of union membership in the same category as other unnecessary troubles from which the company strove to steer clear and continue its work “in peace”. 41  AGHM-P; ARHM-P; BAM-P; DAAM-P; FBF-P; HSM-P; HSSM-P; MM-P; NAAM-P; NSM-P; NUHM-P; ZMM-P. 42  MEWM-P; DMYM-P; QYM-P. 43  BAKM-P; NSM-P. 44  BAKM-P. 45  DAAM-P.

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The idea of a labour union representing a difficulty was reiterated by MWQM-P. Curiously, in one case46 which acknowledged paying a small monthly stipend to a union, what the investor considered the union’s role was to ‘discipline’ workers when they reneged on previous commitments made to him, such as leaving his unit for another because of higher pay despite his company having incurred money and time to train her/him. Labour precarity was one aspect of the adaptive strategy for continuation discussed here, as “labour recruitment” that applied in practice could permit quick (re)adjustments of the cost of production. The criteria that predominantly set the conditions for hiring a worker were: (1) the investor’s need at a particular time based on needed rise in output level and (2) whether the worker’s skill set matched the requirements to perform the duty that was needed for the rise in output. 8.2.2  Arbitrary Pay Scale Among the cases investigated, 41 gave salary figures for the lowest monthly wage they pay (see Figs. 14 to 17 in the Appendix) that is broken down into the following four grades: 1. Less than $10047: In 56 per cent,48 lowest monthly pay falls under the first grade (somewhere between $41.6 and $100 per month), with an average of $77.4, median of $83 and mode of $97. 2. $101–$150: Another 32 per cent49 fall under the second grade, with an average of $121.9, median and mode of $138.7  (median and mode were equal in this instance). 3. $151–$200: One unit50 falls under the third grade ($166.4). 4. $201–above: Three cases51 fall under the fourth grade of $201 and above—with an average of $282.5 and median of $277.4.  DMYM-P.  To give this context, the monthly Consumer Price Index in Afghanistan during the year of the field visit (2018) moved between $111 (the lowest bound) and $113.5 (the highest bound) (Afghanistan National Statistics and Information Authority, 2019). 48  ABNM-P110618; AMPM-P; BAKM-P; BM-P; DAAM-P; FBF-250418; GZAM-U; HKGM-P; HSMM-P; HSM- P; MAM-P; MEWM-P; MMF-P080718; MTM-P; MWQM-P; MZM-P15; MZM-P23; NAAM-P; NSM-P; NUHM- P; QYM-P270718; RHF-P; SNM-P. 49   AGHM-P; AM-P18; AM-P27; BHM-P; DMYM-P; HMKM-P; JKM-P; JM-P; MAAM-P; MM-P; MSM-P; MSSM-P; ZMM-P. 50  AAM-P18. 51  ARHM-P; BAM-P; HSSM-P. 46 47

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The above figures indicate a wide inter-sectoral variation and even within the same units—a sign suggesting that pay scale did not follow a measure of pre-set institutionalized standard and was decided arbitrarily by the investor. The same applies to the highest pay scale. Among the cases investigated, 43  units provided salary figures for the highest monthly wages they pay, which I divided into the four following grades: 1. Less than $250: Among the cases, 49 per cent52 fall under the first grade, with an average of $155 and median of $166—it was a bimodal set, $138.7 and $208. 2. $251–$500: Among the 43 cases, 21 per cent’s53 highest pay scale fall under the second grade, with an average of $403.9, median of $416 and mode of $277.4. 3. $501–$1000: 26 per cent54 fall under the third grade, with an average of $730.7, and median and mode of $693.5. 4. $1001 and above: Two cases55 fall under the fourth grade that pay $1001 and above ($1387 and $3000). In regard to four cases,56 the lowest-paid labourers received item-based pay at $0.01, $6.9,57 $0.08 and $0.15 respectively. In regard to four other cases,58 the lowest-paid labourers were paid daily at $3.2, $4, $5.5 and $1.4 respectively. It is important to mention that even among some of the cases who gave monthly figures, daily- and item-based payment for the lowest-paid workers was common. To illustrate, in ABM-P’s case which did provide salary figures for the lowest and highest monthly pay scale, nevertheless, manual labour was paid separately for three separate items of work: (1) physically unloading a 49  kg sack of wheat from a transport truck and carrying it into the company’s storage, (2) physically carrying 52  RHF-P; ABNM-P; NMF-P; ZKF-P; MMF-P080718; BAKM-P; BM-P; JKM-P; MAM-­ P; MZM-P23; QYM- P270718; SNM-P; AM-P27; MSSM-P; AM-P18; FBF-P; HMKM-P; MM-P; MWQM-P; NAAM-P; NSM-P. 53   GZAM-U; MSM-P; MTM-P; AAM-P18; BHM-P; ZMM-P; AMPM-P; HSSM-P; ARHM-P. 54  ABM-P; HSMM-P; JM-P; NUHM-P; BAM-P; HKGM-P; MAAM-P; AGHM-P; HSM-­ P; DAAM-P; DMYM-P. 55  FM-P; PKZM-P. 56  HRKM-P, NGF-P, SNMM-P, ABM-P. 57  In this case, the item consisted of a handmade finished tailored product (e.g. shirt, dress), which explains why the item-based wage was comparatively higher. 58  FM-P; NMF-P; NNM-P; ZKF-P.

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the sack of wheat from the storage to the production station (a three-story building) and emptying its contents into the input receiver machine (located on the topmost floor) to produce flour, and (3) physically carrying the sack of flour (from the first floor) to the truck and loading it for transportation to the customer. These tasks were paid $0.06, $0.04 and $0.05 respectively. A worker doing all three components of the task would be paid $0.15 for one sack. Doing the same work with 100 sacks (involving physically transporting 14.7 tons of weight) could earn her/him $15. The above eight units’ highest pay scale too remained item-based and daily-based. Among the cases in the research, only three cases59 gave precise figures for the salary they give their labour force. In the remaining 94 per cent of the cases, the salary range was described in terms suggesting a gradual gradation. The salary began from a baseline (the lowest-paid worker) and went up “slowly” (ahesta ahesta). The criteria that might help to raise wages for manual labourers60 were a) the longevity of building a history working in a unit (saabeqa dashtan) and b) learning the task (yaad dashtan). These two criteria formed the basis of face-to-face or mediated (through a head worker or the superintendent) negotiations that could lead to arbitrary incremental pay rise by the investor. As was observed— most closely in the uncertain figures given for lowest paid to highest paid—this could lead to multiple individuals in the same job category (manual, technical and administrative) earning different amounts based on this arbitrary nature of salary scale determination. In companies in which organizational and labour-related division of labour61 had developed comparatively more, the decision to pay workers by the investor(s) was taken according to the type of work they performed—primarily based on the distinction between “manual worker”— also called “apprentice” (shaagird or kaargar)—technical labour (kaargar’e takhniki, i.e. labour requiring knowing how the machine used in the unit operated even if not literate) and administrative labour (kaarmand’e edaari, i.e. work requiring the ability to read, write and disseminate information). The lowest pay in these units was given to the manual  NMF-P; RHF-P; NNM-P.  Given that the criterion for technical labour was already her/his technical skills and for administrative labourers their education level. 61  ABM-P320618; AGHM-P; AMPM-P; ARHM-P; DAAM-P; DMYM-P; GZAM-U; HKGM-P; JM-P; MAAM-P; MSSM-P; PKZM-P. 59 60

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worker—among these, the lowest was paid to a newly hired worker who had little prior experience in her/his area of work. The incremental increase in wages for manual labourers following gaining experience, did not, however, go so high as to begin to overlap with amounts paid for technical and administrative wages. The second pay scale on the ladder was for technical labourers who brought prior experience in the area of work for which they were hired. The highest pay in the unit was given to administrative staff who were required to be educated to a certain degree to qualify. In units hiring only manual labour,62 the distance between the lowest pay scale and the highest pay scale was the least compared to the rest of the cases where a combination of manual and technical, manual and administrative, or manual, technical and administrative branches operated. This too indicates that for physical labour, the gradual increase in the wage level met a ceiling that was not too distant from the lowest pay—it did not rise to the level of technical or administrative pay scales. In only one case63 was reference made to government minimum wage regulation for setting the pay scale for highest and lowest ($69/month)— the unit hired manual labour only. No inter-industrial institutionalized pay scale for physical, technical or administrative labour was referred to by participants as the basis for setting wages, and hence decisions regarding the pay scale were arbitrary, that is, it was structured by the investor habitus based on the decision-making hierarchy within the unit. As its outcome, adjusting labour cost by arbitrarily setting the pay scale constituted a component of the adaptive strategy to ensure continuation of the unit. Setting the scale of salary did not follow a set labour law, allowing the amount of salary to be set arbitrarily by a personalistic governance structure inside the unit, that is, the investor(s) decided which work category (e.g. ranging from workers hired for cleaning to workers operating the machines and requiring technical knowledge) received what amount of salary—seen in the variance of the range of lowest to highest pay among the units (see Table A5  in the Appendix for more details). Moreover, the units being labour-intensive, those paid high wages constituted a small percentage of the total labour force because such high wages were given to the few technical and administrative staff whose numbers, 62  AM-P18; AM-P27; BAKM-P; HMKM-P; HRKM-P; JKM-P; MAM-P; MMF-P080718; MWQM-P; MZM-P23; NGF-P; NSM-P; QYM-P; NMF-P; RHF-P; SNMM-P;120718 SNM-P; ZKF-P. 63  RHF-P.

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compared to the manual labour required to operate the machines, were much lower.64 The other forms of regular financial cost strengthen the view advanced here that the field of production was placed in close association with the family domain—workers treated as auxiliaries but worthy of occasional charity. For instance, the company incurred the cost of providing dining opportunities inside the unit for workers when work hours coincide with breakfast, lunch or dinner (the latter was seen in units working two shifts, day and night)—a cost that three-quarters (74.5 per cent)65 of investors incur. In two-fifths66 of the cases, some workers chose not to return home at the end of their working day even if their residential home and family were in Kabul. This was said to be because a significant portion67 of their salary would be spent on transport cost if they returned home every night. Some others had their residential home in provinces other than Kabul and remained on the company premises for consecutive weeks or months before taking a vacation. During these periods, the company provided them with collective accommodation (multiple workers in one room), which constituted a one-off68 cost for the company: the initial expenditure incurred to build the rooms inside the company premises. The association with family (or servants in the family) was seen as being the strongest in the payment made to labourers arbitrarily in the form of monetary assistance,69 on the occasion of the two Islamic Eids70 (an elder also pays this—called eidee—to children and youth as a gesture of kindness but also 64  Disaggregated data on manual, technical and administrative labour was not sought for reasons of scope. 65  AAM-P18; AM-P18; ARHM-P; ABNM-P; AGHM-P; AMPM-P; BAM-P; BAKM-P; BHM-P; FBF-P; DAAM- P; DMYM-P; FM-P; GZAM-U; HKGM-P; HMKM-P; HRKM-P; HSMM-P; HSM-P; HSSM-P; JKM-P; MAM-P; MEWM-P; MMF-P; MM-P; MSM-P; MSSM-P; MTM-P; MWQM-P; MZM-P15; NM-P; NNM-P; NSM-P; NUHM- P; PKZM-P; QYM-P; ZKF-P; ZMM-P. 66  AGHM-P; BAKM-P; BHM-P; DAAM-P; DMYM-P; FM-P; HMKM-P; HRKM-P; HSMM-P; HSSM-P; JKM-P; MAAM-P; MEWM-P; MM-P; MTM-P; NNM-P; NSM-P; NUHM-P; PKZM-P; QYM-P. 67  Depending on the distance between the unit and their home in the city. 68  This is often a one-off cost because the accommodation units cannot be rented out to outsiders due to their location inside the walled compounds of the factories; hence, foregoing rent to workers did not constitute subsequent opportunity cost for an investor (they will likely remain empty if not accommodating the workers). 69   AM-P18; AMPM-P; BAKM-P; HRKM-P; HSSM-P; JM-P; MEWM-P; MSM-P; MSSM-P; MTM-P; NAAM-P; QYM-P; SNM-P090618; DAAM-P; ARHM-P; ZMM-P. 70  The elder in a family, as part of the Afghan culture, gives monetary “hand-outs” (eidee) to children and youth.

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to demonstrate and abide by the hierarchy of elder/youth), an upcoming event to celebrate (such as a marriage ceremony), during times of distress (e.g. death of a family member), or for occasionally buying them clothes. Non-salary payments having to do with work only were witnessed in seven units,71 which gave better-performing workers a “bonus” (bones or bakhsheshi) as a form of encouragement. Occasional assistance requiring financial cost to the investor to the workers included, in some cases, medical expenses for workers for injury at work or other monetary assistance to this end,72 transportation to and from work,73 and purchase of mobile credit cards.74 8.2.3  Arbitrary Work Hours From the cases investigated, nearly three-quarters (69 per cent)75 did not provide precise numbers for daily work hours for their labourers, answering the question regarding labour work hours in terms that indicated a continuous shift—increasing during times of high work volume but otherwise remaining steady at a minimum level. At the minimum level, on average a labourer worked 9.6 hours per day in the units investigated—with a mode of eight hours and a median of nine hours. Above the arbitrarily set number of work hours, if a worker worked overtime, some units76 paid, on hourly basis, for the overtime work. Some others among these units77 pointed out the increase in work hours in accordance with the heightened volume of production without referring to whether this was compensated with an overtime pay.78 In only one-fifth of the units79 did the workers have a comparatively fixed number of work  AGHM-P; HKGM-P; HSSM-P; DMYM-P; HKGM-P056018; JM-P; SNMM-P.  ARHM-P; ABM-P; HSM-P; MSSM-P; NM-P; PKZM-P; ZMM-P. 73  AAM-P18; MAAM-P; MMF-P; MM-P; MSSM-P; MZM-P15. 74  DMYM-P; MSM-P; SNM-P. 75  AAM-P18; ABM-P320618; ABNM-P; AGHM-P; ARHM-270618; BAKM-P; BM-P; DAAM-P; FBF-P; FM-P; HKGM-P; HMKM-P; HRKM-P; HSM-P; HSSM-P; HM-U; JM-P; MAAM-P; MAM-P; MEWM-P; MMF-P080718; MM-P; MSM-P; MSSM-P; MTM-­ P; MWQM-P; MZM-P15; MZM-P23; NAAM-P; NGF-P; NMF-P; NSM-P; PKZM-P; SNMM-P; ZMM-P. 76  ABM-P320618; DAAM-P; FM-P; HSSM-P; MAM-P; MEWM-P; MSSM-P; NAAM-P; PKZM-P; ZMM-P. 77  AAM-P18; BM-P; HSM-P; MAAM-P; MTM-P; MZM-P15; SNMM-P. 78  It is worth noting that, in cases where overtime pay was mentioned, it was referred to as a non-salary assistance to the worker. 79  AM-P18; BAM-P; BHM-P; DMYM-P; GZAM-PU230718; HSMM-P; JKM-P; NNM-­ P; NUHM-P; QYM-P; SNM-P. 71 72

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hours per day, which was on average 9.7 hours per day—with a mode of 12 hours and median of 9.5 hours per day (see Table A4 in the Appendix for a complete drawdown of work hours per day or per item). The above analysis suggests that labour recruitment functioned as an adaptive strategy by operating on the basis of precarious labour, arbitrary pay scale and arbitrary work hours per day. These three, combined, functioned as an adaptive strategy for continuation because the main cost of production (wages) was adjusted relatively quickly by laying off workers, offering a lower pay and increasing the number of work hours when the production volume increased.

8.3   Production Modality Production modality refers to whether the units follow “order-based” (sefaresh) or pre-order production. The first was based on receiving verbal orders from clients as the main information used for allocating resources, the second on producing to supply to open markets where guaranteed purchase as in the first case did not apply. Order-based production was determined by the producer and the client agreeing, prior to allocation of production input by the producer, to produce a certain item with guaranteed purchase in the end, in which the transaction followed any other type of face-to-face agreement in society and the role of market; in the form of a spontaneous impersonal institution,  was seen as irrelevant. Here, the AIE “trust” as a non-inquisitive disposition to take others’ “words” (lafz) at face value functioned as an ordering mechanism and coercive mechanisms (e.g. state laws, regulatory and law enforcement agencies) were not involved. Production modality functioned as an adaptive strategy because it permitted resource allocation based on short-term plans, hence adjusting costs to the level of production without risking a glut. Pre-order production, to the contrary, indicated, to a degree, institutionalized exchange through an impersonal marketplace that entailed production capacity being utilized to produce a commodity for sale in return for its exchange value in the event of finding the right bidder (i.e. customer). I consider this form of exchange in advance of guaranteed purchase to constitute a ‘market-based’ exchange, based on which the entity referred to as “market” (in all its myriad details and complex processes) determines whether the product brought into it—where it meets the other side of the bargain, the buyer—will at the end of the day remain in the producer’s output inventory or will be sold. If the latter does not

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materialize, the price might need correction, or the marketing strategy might need to be ameliorated. To the contrary, in order-based production, purchase was guaranteed—structured by the AIE “trust”. Under this system, product details, the price and the guarantee of purchase were settled prior to resource allocation. The proposition “supply meets its own demand” was, then, supplanted with “supply only if purchase was guaranteed”. Based on the analysis of the producer–buyer relations in the field, what approximated to an “exchange relation” was not, in most cases, distinguishable from any other type of social relationship (see Sect. 8.4. in this chapter for elaboration). Market exchange, as such, was one form of social relationship in the context that was devoid of the spontaneity involved in an ephemeral exchange and required recognition and trust-building. Given habitus’ structuring effects on governance and the encounter with the elements of the field as its objective reality, production was often “coordinated” by producers and buyers prior to resource allocation. This order-based exchange relationship subsequently permitted use of ograyi and DP sales (see Chap. 7, Sect. 7.1.2). Based on order-based production, the producer put use (or purchase) of raw material on standby until receiving an order, relying on the verbal promise and based on mutual recognition—this AIE’s role was made more significant by the fact that a promise of future exchange, where the parties had not transferred any goods or other forms of value, did not constitute an exchange as per Sharia law (not that it was forbidden but it was simply not recognized as an exchange). Hence, the promise of purchase could not become the basis for legal proceedings should one party (in this case the buyer) renege in the future. In rare cases, order-based production was seen to also involve taking an advance payment by the producer.80 Among the cases, more than three-fifths (69 per cent) entirely or predominantly rely on order-based production.81 Among the order-based producers, nearly one-third (37 per cent) produce for projects.82 Projects  MAM-P; NNM-P; AAM-P18; DMYM-P.  AM-P27; MAAM-P; AAM-P18; BAM-P; HSSM-P; HSMM-P; AGHM-P; AMPM-P; HMKM-P; JKM-P; MAM- P; MM-P; MTM-P; MWQM-P; MZM-P23; NAAM-P; NM-P; NSM-P; SNMM-P; ZMM-P; NNM-P; MSM-P; QYM-P; ABM-P; DMYM-P; FBF-P; HRKM-P; NGF-P; NUHM-P; GZAM-U; HSM-P; BM-P; ARHM-P; MSSM-P; ABNM-P. 82   AAM-P18; ABM-P; AM-270318; BAM-P; DMYM-P; HMKM-P; HSMM-P; HSSM-P070518; MAAM-P; MM- P; MTM-P; MZM-P15; NUHM-P. 80 81

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were governmental or NGO contract work for which production took place only after a formal agreement was reached between the producer and the contracting party. To the contrary, one-tenth83 of the cases were observed to produce prior to receiving an order for supply to market. Where information relayed by the market played a role in determining resource allocation and output volume, it happened based on first-hand dealings (the producer visiting the buyers or sending a representative). This information was combined with order-based production to plan the company’s upcoming production schedule.84 Other than this, stock keeping (a sign of pre-order production) was an aberration from normality which was based on order-­ based production, seen when sales witnessed a downturn, as was the case during the month of Ramadan.85 Pre-order production was, in other cases, for keeping the labour force occupied considering that dismissing them and re-recruiting in short order would entail some level of time-delay given that in this environment of production the sudden rise in orders would require a quick readjustment of factors of production to meet the buyer’s demand. Moreover, keeping workers hired but idle was observed as a form of waste.86 The pre-order production in such cases led to an inevitable but temporary increase in output stock and did not suggest a reliance on impersonal markets. Pre-order production was also observed for precautionary stockage for sudden orders.87 One other factor that structured production modality apart from orders was ‘seasonal adjustment’, which referred to a rise or fall of output level based on the time of year. This functioned as another similar approach that was reliant on a prior learning experience, providing the producer with information regarding when to increase or decrease production volume88 or when production, although continuous, led to additional stocks and not immediate sales.89 In these cases, production followed (as with  SNM-P; FM-P; BHM-P; HKGM-P; HM-U; MMF-P.  MSSM-P; NMF-P; NSM-P; RHF-P; HSM-P; NUHM-P; AM-P18. 85  BAKM-P; DMYM-P. 86  DAAM-P; BAKM-P; MEWM-P; PKZM-P. 87   MSSM-P; SNM-P; HRKM-P; DMYM-P; MAM-P; MM-P; MSSM-P; NAAM-P; AM-P18018; BM-P; HKGM-P. 88  ARHM-P; HSMM-P; JM-P; NSM-P; QYM-P; SNMM-P; BM-P; AMPM-P; MSM-P; DMYM-P; FM-P; GZAM- U; HM-U; MEWM-P; MSSM-P; MMF-P189718; NUHM-P; SNMM-P; SNM-P; ZKF-P2504018. 89  BHM-P; BM-P; MMF-P. 83 84

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order-­based production) a short-term time horizon and cautionary mentality by closely observing the level of previous sales prior to allocating resources, rather than putting blind trust in open markets based on the principle of competition to bring forth the demand. Mass production and supply to the market—to “meet its own demand”—to suggest a belief in competitive markets was not observed.

8.4   Relationship with Clients A corollary to the order-based production (and sales on ograyi or DP) was the establishment of a network of clients with whom the producer dealt regularly. Although the existence of a limited number of clients could be a symptom of the size of the market (not large enough to allow for frequent changes of clients), a regular pool of clients showed, on the other hand, the structuring effects of the investor’s habitus through the AIE “trust” that, in an embodied practice, gave order to their interaction in the market with clients. This, as its outcome, functioned as an adaptive strategy because, combined with order-based production, it was a coordinated guarantee of sales. That is, producers secured buyers through building a personal relationship prior to committing resources to production. The pattern in data indicates that the majority of producers (64 per cent) maintained a regular pool of clients who were less likely to change with each round of supply.90 In the remaining units, this applied partially, that is, part of the clients formed a regular pool to which new clients entered and left91 and, in a few cases, most of the clients were liable to change92 but a regular pool was nonetheless maintained. For marketing (baazaar’yaabi), the component of human-to-human contact in finding clients was the main method; the nature of the market relationship was predominantly (74.5 per cent) shaped by individuals meeting93 to form an idea of each other and establish a rapport based on an impressionistic 90  ABM-P; AGHM-P; AM-P18; AMPM-P; ARHM-270618; BAKM-P; BM-P; DAAM-P; DMYM-P; FBF-P; FM- P; HMKM-P; JM-P; MEWM-P; MM-P; MSSM-P; MWQM-P; NAAM-P; GZAM-U; HKGM-P; HRKM-P; HSMM- Pl; HSM-P; MAAM-P; MZM-P15; NGF-P; NM-P; NSM-P; NUHM-P; PKZM-P; QYM-P280818; RHF-P; ZMM- P. 91  JKM-P; MTM-P; NNM-P. 92  AAM-P18; SNMM-P. 93  AM-P18; AAM-P18; ABNM-P; ABM-P; AMPM-P; BAM-P; BHM-P00818; BM-P; DAAM-P; DMYM-P; FBF- P; FM-P; GZAM-U; HKGM-P; HRKM-P; HSM-P; HSMM-P; HSSM-P; JKM-P; JM-P; HMKM-P; MAAM-P; MEWM-P; MAM-P; MMF-P; MM-P;

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appreciation—non-verbal marketing (e.g. distributing brochures, business cards and rarely but also television advertisements) was practised but this was rare.94 In-person appreciation was the taken-for-granted form in the context where the technologies of impersonal relationship-building were mostly absent. For some units (16 per cent) use of the internet for marketing purposes, including emailing and social media, was practised but was supplementary—producers relied mainly on face-to-face marketing by meeting clients.95 Internet use for companies that were more established held a more significant role, but these were rare among the participants (14 per cent). In any case, where a distant transaction of this kind took place prior to face-to-face familiarization, an advance payment to the producer’s bank account was sent by the client before (s)he agreed to send the requested merchandise.96 Normally, to establish the relationship with the client a “marketing representative” (bazaar-yaab) visited potential clients personally on several tours to negotiate and persuade them to purchase the product. Inversely, in some cases97 potential clients approached the company due to the nature of the product98 or because the producer had a well-established reputation. In addition to this form of direct marketing, another form of establishing the market relationship consisted of establishing a relationship with one or multiple intermediary/intermediaries or “sales outlets” (nomayendagi) that sell under the company’s official brand—performing as the extension of the company and representing it in practice—or the sale outlet operated as a wholesaler independent of the producing company, working on commission.99 Opening a sales outlet was observed more commonly by companies with regular customers in provinces in MSSM-P; MTM-P; MWQM-P; MZM-P15; NAAM-P; NSM-P030648; NUHM-P; QYM-­ P; SNMM-P; ZKF-P; ZMM-P; RHF-P. 94  DAAM-P; FM-P; HSMM-P; MAAM-P; MAM-P; MM-P; NANM-P. 95  AM-P18; BAKM-P; FM-P; GZAM-U; HSMM-P; HSSM-P; NSM-P; ZMM-P. 96  BAKM-P; DAAM-P; DMYM-P; HKGM-P; JKM-P; NAAM-P; NSM-P; ZMM-P; AAM-P18. 97  HSM-P; NUHM-P; BHM-P00818; AMPM-P; DAAM-P; DMYM-P; HMKM-P; JKM-­ P; MEWM-P; NAAM-P. 98  The producer produces an important intermediate good, such as plastic bottles (HSM-­ P), or is the only producer of the product in the country, such as sanitary fittings (NUHM-P). 99  AMPM-P; ARHM-P; BHM-P; DAAM-P; DMYM-P; HKGM-P; HMKM-P; HSMM-P; JM-P; MSSM-P; MWQM- P; NAAM-P; NANM-P; NNM-P.

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addition to Kabul. The producer sent products directly to the provincial outlet, which then sold them to the clients in the province.100 An occasional form of connecting with random clients—those who, in the ‘economic’ sense of the term, had a relationship with the producer that was characterized by the act of exchange only as against the regular pool clients who were known and sometimes became acquaintances or even friends—was exhibitions for “made in Afghanistan products” (towleedaat’e mili). These were organized by the government or an NGO in collaboration with government agencies, in which entry was paid— entry in these exhibitions as described by some participants appeared to be highly competitive and was not available as a state-supportive privilege to all producers. Exhibitions provided a platform for some producers to market their products and distribute their contact details.101 In these cases, the producer–client relationship was less reliant on person-to-person rapport due to the frequency of transactions that took place during an exhibition (lasting a few days) and mostly did not go beyond this. This was a temporary ‘market’ in the most commonplace usage of the term. Exhibitions were frequently mentioned by female producers102 as one important way of reaching clients; they provided an opportunity that was officially and deliberately devised to provide a separate space from the social domain where the prevalent social structure, patriarchal family, relegates ‘commerce’ to male members. Within such a social context, exhibitions provided a temporary silo for women to be able to act as professional traders. Keeping a personal-level contact with customers functioned as an adaptive strategy because it permitted the producer to adjust production costs in a short time by tailoring them to their sales expectations according to the already existing list of regular clients. A regular pool of clients, hence, was one responsive adaptation of the units in their encounter with the elements of the field. This was regulated by the AIE “trust” that was established and maintained through person-to-person meetings, familiarization and appreciation.

 AMPM-P; ARHM-P; DAAM-P; HSMM-P; MWQM-P.  ABNM-P (this producer’s contact details were taken in an agricultural exhibition); DAAM-P; GZAM-U; HM- U; MAM-P; FBF-P (temporary markets for women producers another guaranteed way of finding clients); MZM-P23; NMF-P; RHF-P; ZKF-P (this producer’s contact details were taken in an agricultural exhibition); ZMM-P; NGF-P; SNM-P. 102  It was not common to see women sellers in any other form of retail business (traditional or modern) in the context. 100 101

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This mechanism, by design, was mostly non-reliant on an impersonal exchange, as is often the assumption by a market-based allocation. Most productive activities in the research operated with a regular pool of clients, mostly as a product of building a face-to-face social bond, functioning as one adaptive strategy to ensure the continuation of the investment following entry into the sector.

8.5   Conclusion The analysis in this chapter brought the discussion on manufacturing activities in Kabul’s post-2001 context to the domain of adaptive strategies that had developed within and without units meant to ensure their continuation through expeditious adjustment of cost of production. To reiterate the ‘iron and hammer’ analogy, the elements of the field in a continuous process configured the strategies that were constantly shifting in detail but nonetheless corresponded to stable categories of practice. The fundamental strategy that was observed among the cases was a personalistic, hands-on and personal propinquity of the investor, shaping a governance structure in a top-down hierarchy with the investor occupying the top position, often performing all the tasks of the managerial sub-units her/himself (finance, raw material procurement, production and warehousing supervision, quality control, marketing, etc.). This form of governance ethos was, I maintain, a close reproduction of the top-down patriarchal hierarchy of power in a family structure in the context where the authority figure wields a commanding influence (see Chap. 3 Sect. 3.5). The conditions in the context, setting the limits of possibilities for investors within which the internal and external details of the units were organized, operated as the objective “structuring structure” or field of productive activity. It was encountering this field that the habitus’ close reproduction of the hierarchy of family inside a production unit and the routine adaptive strategies had developed that brought about the continuation of the productive activity through expeditious cost adjustment. In a personalistic governance structure the owner(s) of the unit supplanted the authority figure in a family unit. Everyday physical attendance by the main authority figure was viewed in all the cases investigated except for four cases, whereby monitoring of every detail of the production process was exercised. This top-down hierarchy came to bear on two important aspects of decision-making, one regarding larger questions that could affect the scale of production, and the other regarding routine affairs of

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the unit. Larger questions were taken after consultation with other family members in family-owned units, with other partners in partnerships, and with subordinates in the unit in the case of single-owned units. Decisions regarding routine affairs were taken by the ‘authority figure’ directly, with some level of operational differentiation observable in some units with relatively higher estimated financial asset value. The persons in charge of these sub-units, however, were not decision-makers and were only supplements to the main authority figure (i.e. the investor). Delegation of decision-making authority was rarely witnessed and that too to a certain extent (the larger questions remaining in the hands of the owner to decide on). Members of the unit, as subordinates, could wield an advisory role. They might be consulted on minor details on which they had practical knowledge (e.g. a worker operating a machine knowing which button can decrease or quicken its per unit of time output). They were, otherwise, predominantly receivers of orders in a hierarchy characterized by submission to the authority figure. The outcome of this form of governance structure was witnessed in three approaches to resource allocation that were meant to adjust volume and thereby cost of production to the sales levels in short order. These three involved the areas of labour recruitment, production modality and relationship with clients. The feature characterizing the cases in the research was their reliance on labour force as the main factor of production, considering that the level of sophistication of machines were not at a level where production could be handled through inter-linked automated systems, except for two cases where this was the case only relatively. Labour wages, therefore, constituted the main cost of production. Unlike purchase of raw material, labour can be hired and dismissed depending on the volume of production. The ability to summarily increase or decrease labour numbers was analysed here as part of the adaptive strategy as it permitted expeditious adjustment of the cost of production. Labour precarity (i.e. temporary labour without a legal contract who was liable for dismissal at any point with no severance pay or future employee–employer commitments), arbitrary wages and arbitrary work hours were common practices among the cases. It should be pointed out that this may not represent a usual case of pre-meditated exploitative intention by investors because the idea of exploitation itself is a cultural product, to which the habitus of investors in Kabul might not be fully exposed given the recentness of capitalist production in the context. Providing a (temporary) work opportunity for these workers was, in fact, viewed ipso facto by participants as a sign of their dedication to social good

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underlined by the communitarian norm (see Chap. 6, Sect. 6.1.3, and Chap. 7, Sect. 7.1.3, for details). Arbitrary pay scale was seen in the form of graded and imprecise responses regarding wages by the majority of participants, from the lowest-­ earning worker to the highest-paid worker. And arbitrary working hours were witnessed in the imprecise responses by participants regarding the number of hours a manual, technical or administrative worker works per day. On average a worker worked for 9.6 hours per day in the units investigated, ranging between eight hours/day and 16 hours/day. In regard to production modality, it was noted that order-based production was the main method, which was given an institutionalized ordering mechanism through the AIE “trust”. The other adaptive strategy consisted of establishing a person-to-person relationship with clients, through which a regular pool of such clients was formed for whom the production takes place most often. The governance structure and the three adaptive strategies were structuring effects of investor habitus in its encounter with the elements of the production field. Investors in the context adopt a ‘prudential’ day-to-day approach for allocating their resources on production to adjust costs with gradual or drastic changes in any element of the field. This was underpinned by the ethos of treating personal wealth as sacrosanct, as a product of ‘divine good will’. Moreover, the role of impersonal market information in such a resource allocation strategy was, in the majority of the cases, not relevant as an explanatory element, given that investors established face-to-face personal relationships with clients as a form of reassurance of future purchase. They, in effect, coordinated resource allocation through a deliberate process both inside the unit and outside with clients, rather than following the spontaneous mechanism of markets. It was building on the above analysis that the QPS ‘bureaucratic governance’ and ‘impersonal exchange’ developed as two other indicators showing that this sector was structurally insignificant. Trends pointing towards division of labour in the bureaucracy of the units can be witnessed, particularly with rising productive activity and volume of production (reflected in the estimated net value of assets by investors). In other words, size of the productive activity did begin to require the establishment of sub-units that were in charge of particular tasks. But this trend was not significant among the cases investigated—in only four units did a superintendent wield decision-making power regarding routine affairs of the unit. On the other hand, the tendency for impersonal markets as a sign of moving away

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from order-based exchange was witnessed—often in conjunction with order- based exchange practices—in rare cases where the producer had a monopoly on producing a good or produced consumer products for which striking purchase agreements would be time-consuming. As a general trend among the cases, the relationship with clients was based on personal familiarization and recognition (also needed for subsequent sales on ograyi and DP).

References Afghanistan National Statistics and Information Agency. (2019). Estimated population of Afghanistan 2019–2020. Retrieved February 17, 2020, from nsia.gov. af:8080/wp-content/uploads/2019/06/98-‫سال‬-‫هنایی‬-‫نفوس‬-‫�آورد‬-‫بر‬.pdf. Screpanti, E. (1999). Capitalist forms and the essence of capitalism. Review of International Political Economy, 6(1), 1–26.

CHAPTER 9

Conclusion

9.1   General Analysis The book’s analysis followed a two-pronged approach. Firstly, it gauged and explained the socially contingent practical knowledge of manufacturing—structured by AIEs embedded in habitus—that induced the investment decision in this sector in Kabul during 2002–2018, followed by an explanation of the adaptive strategies for enterprise continuation based on routine encounter with the salient elements of the field. Secondly and derived from the findings of the above analysis, deductive observations were made regarding emergent signs within the sector that suggested whether the sector retained some level of significance in how economic resources were allocated in the economy during the study period (this thematic sequence corresponded to the sequence of the three RQs—see Chap. 1, Sect. 1.1.). The review in Chap. 2 narrowed the theoretical discussion down to the core principles of NIE as the main theoretical articulation of EEA, expounding the ontological viewpoint common in this tradition, that is, the presupposition of a universal ‘ersatz’ human as its unit of analysis. It was shown that NIE views humans as ‘calculative’ agents whose productive resource allocation is assumed to be driven by the interest in maximizing their ‘pay-offs’ (North, 1990, 2005) based on ‘market prices’ as the informational signal (Williamson, 2000). This epistemology, we saw, limits the approach in the study of institutions to those that lie in the © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 K. Rafi, Patriarchal Hierarchy, https://doi.org/10.1007/978-3-030-98407-6_9

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environment of individual humans, which unwittingly deprives it of the embodied institutions of habitus that rest in empirical human agents, and were transmitted/acted upon through social structures. Notwithstanding the espousal of ‘bounded rationality’ in NIE in an attempt to moderate the absolutistic notion of the instrumental ‘rationality’ underlying the theoretical models in mainstream ‘rational choice economics’, the epistemology in NIE nevertheless results in taking human interest as pre-given, which the term ‘ersatz human’ encapsulated as a semantic/methodological signpost throughout the book. The pre-given ersatz rationality substitutes for empirical human, the former thought of as not fully but merely boundedly self-interested utility maximizer in line with Simon (1955). The thinking in NIE is primarily led by a conception of institutions in the form of ‘formal’ rules (admittedly residing outside the individual in objective form), defining it as human-­ made constraints. These environmental ‘constraints’ are then studied in their objective form as represented by laws and regulations which, placed within a spectrum of permissive-prohibitive dichotomy, are examined for their effect on the a priori ‘ersatz’ human’s self-interestedness as the predominant form of economic motivation. In Chap. 2, Sect. 2.2. we saw regarding the history of the concept of enabling environment that it has been conceptualized as an ‘institutionalist’ extension of the previous ‘Washington Consensus’ programme, advocacy for it having proliferated from the early 1990s onwards as observed in the World Bank reports, policy and discussion papers. Formulated mostly regarding the significance of the state legal and regulatory framework as the most important elements of the ‘environment’ of an economy, this policy line requires these elements to be rendered conducive through ‘good governance’ so as to enhance the possibility of ‘ersatz’ human productive activity in a strategy of market-based allocation. Chapter 4 showed that the project of rebuilding in post-2001 Afghanistan followed the EEA approach, demonstrating its exogenous formulation and implementation in view of the state- institutional void of the post-Taliban juncture and the plan to remodel the country’s political economy, the project informed by a push to establish representative democracy with a market-led economy, abiding by the principle of ‘non-intervention’ in resource allocation. To problematize the subject area in this research, the book’s methodology proposed an epistemology that requires, to the contrary, taking account of the ‘empirical human’ whose institutionalized normative practices, which I have called ‘implicit institutions’ in the book, were often in embodied form and not distinguishable from their routine acts, including those that are seen to have led to the decision to invest in the

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manufacturing sector in the study context, Kabul. The book’s fundamental point was to take ‘implicit socio-structural institutions’ and the milieu where they reside, that is, the empirical individual and her/his interest as part of her/his lived experience as the point of departure, the data available on this a posteriori and mostly after a good level of data collection regarding the dispositional attributes of habitus in the context. In Chap. 3, the book worked out an institutionalist theoretical framework through a critical review of the concept of ‘institution’ in NIE (partly also in OIE), conducting this theoretical exercise with the help of heuristic concepts of habitus, field and the forms of ‘capital’ (‘economic’, ‘social’, ‘cultural/informational’, ‘symbolic’). Adopting a Bourdieusian lens necessitated a discussion of the ‘mega-structure’ patriarchal family as a primal “structuring structure” (a la Bourdieu) from which originates most of the formative knowledge that structures individual habitus in Kabul’s context. This structuring process, in the context of Kabul, was explained within a dialectical relationship with Islamic precepts articulated as injunctions in the Quran, Islam’s highest catechistic textual authority. Through this exercise I sought to develop the micro-analytical tools in this relationship (family and religious ideology), calling them active institutional elements (AIEs) to refer to the fact that they are active in the circumstances relevant to this research—the decision-making for entry into the manufacturing sector and the subsequent continuation of the enterprise. The analysis in Chap. 6 read patterns in the micro-level data suggesting that the practical knowledge of manufacturing as a professional possibility was structured by the investor’s lived experience and prior experiential exposure as part of their life-history. Habitus’ structuring effect in these cases was, therefore, by design tied to lived experience—the modality of studying their concern for ‘utility maximization’ can be read through such a lens. The conditioning effects of habitus were seen in both the source of the initial capital and subsequent access to credit, that is, habitus’ effects in compliance with Sharia law regarding the forbiddance of “usury” had rendered the practice of credit from sources other than personal wealth, family and social relations rare and uncommon among participants. The investment decision was shaped most notably by obeisance to the authority figure in the family, emulation of her/his profession or perpetuation of the familial professional heritage. Combined with this AIE but also separately in some cases, social relation was observed as a conduit of transmitting the practical knowledge of manufacturing between the investor and a known person (friend, relative, colleague, acquaintance, etc.), functioning as an institutionalized social capital that operates as a non-­pecuniary, noncommittal and non-reciprocal information transmission mechanism (in

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some cases acting as a persuasive factor on top of information transmission). This information, subsequently, either directly influenced the decision-making process to enter the secondary sector or provided significant input that shaped this act indirectly. Finally, commitment to a unitary notion of homeland and its people was retrospectively viewed by the majority of investors as another structuring effect that induced their investment decision. The simultaneity of participants’ ‘reasons’ for the initial investment decision, mentioned at different points in the interview, also revealed a decision-making process by which objective and subjective inducement factors were intertwined. In the majority of the cases, the participants’ interestedness was combined with the objective interest of earning a livelihood and a subjective aspiration that tended to view a link between production and such norms as fulfilling a responsibility towards the “homeland” and the community. This was the symbolic capital that accrued to the participant by disguising what was, in purpose and appearance, the domain of the material (manufacturing), showing that accumulating symbolic capital and concern for its preservation happened parallel to and as an integral part of accumulating ‘economic’ capital. In Chap. 7, where I constructed the ‘field of manufacturing’ as a social ‘microcosm’, it was explained that as a physical attribute of the sector, and due to the continuous presence of the structuring effects of habitus, the investors to a large extent were bound to the production unit in a way that limited their ability (or choice) to re-allocate to other industries within the sector or to exit the sector entirely. The first field element was asset specificity, which denotes the feature of machines that made their reselling (in the event of re-allocation or exit) comparatively more costly (in the form of lost value) than remaining in the sector in some form. The second element was sales on ograyi or DP sales, which was observed in the majority of the cases to generate social capital, entwining the producer with her/his many clients in a sales relationship that became relatively permanent based on past dues—leaving the sector or re-allocating entailing the strong likelihood of losing past dues and social capital for the producer. The third element was immaterial, that is, social status as a cultural capital which was dependent in its objective basis for its preservation on the maintenance of the productive activity. Moving assets or exiting the sector threatened the stable basis of preserving this status for which being an investor or producer provided the tangible objective reality and justification. The other immaterial element in the field was symbolic capital that was accrued by

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perceiving a close link between production as such as a service to the community and the ‘homeland’. The majority of investors saw their work as more than merely earning a profit, and in the form of an ‘emotional’ investment by linking the productive activity, in a symbolic sense, to a larger cause. Not opting to re-allocate or exit was therefore partly due to concerns with preserving this symbolic capital. In section two of the same chapter, the two macro-level field elements were constructed that corresponded to the two political economy determinants discussed in Chap. 1, namely, susceptibility to security conditions (as an effect of the ongoing militant insurgency or determinant ‘1’) and the government’s role in productive activities and national and international competition (as direct outcomes of the market-oriented EEA or determinant ‘2’). The effects of these two elements were recognized by participants as “challenges” (janjaal or moshkelaat), their salience as field elements determined due to their recurrent mention by the producers as relevant to their activities. These elements combined set the limits of possibilities for investors within which the internal and external details of the units were organized, operating as the objective “structuring structure” (see Bourdieu) or field of productive activity. It was by encountering this field that the investors’ habitus developed ‘adaptive strategies’ to ensure enterprise continuation. These strategies served, foremost, the main purpose of adjusting the cost of production in relatively short order. The strategies demonstrated a general orientation that was continuously (re)adjusted to the elements of the field, constantly shifting in detail but nonetheless corresponding to stable categories of practice. The fundamental category that was observed among the cases was a personalistic hands-on governance structure based on a top-down hierarchy with the investor occupying the top position. This form of governance ethos was patterned along the top-down patriarchal hierarchy of power in a family structure in Kabul, where the authority figure wields an institutionalized influence often through (in)direct command. Details of the production process were personally managed and dictated by the ‘authority figure’ (the owner who in this context supplanted the authority figure in the family) through everyday physical propinquity—witnessed in all the cases investigated except for three. This top-down hierarchy came to bear on two important aspects of decision-­ making, the first regarding larger questions that could affect the scale of production, the other regarding routine affairs of the unit. Decisions on larger questions rested with the authority figure. Decisions on routine

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affairs were taken by her/him directly with some level of delegation, permitting arbitrary forms of operational differentiation that were observed in some units with relatively higher estimated financial asset value. Delegation was seen in members of the unit, as subordinates, wielding a consultative role regarding practical details in which they were adept. They were, otherwise, predominantly receivers of orders within the top-­ down hierarchy. This means that the persons in charge of sub-units, if any, were not decision-makers and only non-bureaucratic supplements to the main authority figure. The outcome of this form of governance structure was witnessed in three approaches to resource allocation that were meant to adjust volume and thereby cost of production to the sales levels relatively rapidly. These three consisted of labour recruitment, production modality (order-based or pre-order production) and relationship with clients. The cases in the research were majority dependent on labour force as the main factor, owing to the level of technical sophistication of machines with minimal to no inter-linked automated systems except for two cases where this was relatively the case. Labour wages, therefore, constituted the main cost of production, and the ability to summarily increase or decrease labour numbers formed part of the adaptive strategy, as it permitted adjusting the cost of production in short order. Labour precarity, arbitrary wages and arbitrary work hours were common practices among the cases. Arbitrary pay scale was seen in the form of graded and imprecise responses regarding wages by the majority of participants, from the lowest-earning worker to the highest-paid worker. And arbitrary working hours were witnessed in the imprecise responses by participants regarding the number of hours a manual, technical or administrative worker works per day. On average a labourer works for 9.6 hours per day in the units investigated, ranging between 8 hours/day and 16 hours/day. Regarding production modality, it was noted that order-based production was the main method coupled with the third adaptive strategy in the form of establishing personal relationship with clients, through which a regular pool of such clients was formed for whom the production took place most often, its volume reduced relatively rapidly when such orders were reduced. The role of impersonal market information in order-based resource allocation strategy was seen as non-relevant in the majority of the cases, given that investors establish face-to-face personal relationships with clients as a form of reassurance of future purchase. They coordinated

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resource allocation through deliberation both inside the unit and outside with clients. In the majority of the cases, investor habitus was seen to transmit and reproduce social structures, the predominant extant form of ‘mega-­ structure’—in this case a top-down hierarchy most closely aligned with a patriarchal family. The governance structure in the overwhelming majority of the cases was patterned, in a relatively homologous way, with a top-­ down hierarchy in the patriarchal family as found in the context. Although the income and wealth disparity of such a structural reproduction might not be at the forefront of the form of inequality this leads to in Kabul, it nonetheless puts economic development on a path marked by growing social stratification, possibly leading to more egregious wealth-based distinctions in future. For its material and social outcome as criteria laid out in assessing manufacturing activities in Kabul during 2002–2018 in Chap. 1, Sect. 1.2., the book therefore argues that within a market-oriented EEA policy, habitus’ structuring effects in Kabul (2002–2018) resulted in a structurally non-significant manufacturing sector that socially functioned as a mechanism for reproducing the hierarchy of power in a patriarchal family within the field of production.

9.2   Four QPSs The book applied an institutionalist framework by adapting the Bourdieusian framework, the book’s epistemology counterposed to the epistemological assumptions that inform EEA’s approach. The analysis regarded the field empirical data as a reflection in tangible objective terms of EEA’s practice, the main research strategy followed in the book to demonstrate the effects on manufacturing of EEA’s adoption as a policy framework. This examination from the outset excluded macro-level statistics regarding the role of the manufacturing sector in Kabul’s economy (or Afghanistan’s). This was because the sector’s size remains marginal by such measures, as discussed in Chap. 1, Sect. 1.2. The analysis, however, sought to locate a few structural proxies as indications or tendencies pointing towards the significance of this sector as an ‘organ’ in the economic ‘anatomy’ of Kabul. For this purpose, four qualitative proxies of significance were in combination applied to deduce these suggestive emerging tendencies owing to a growth in size, including: (a) horizontal mobility of capital, (b) inter-sectoral vertical expansion, (c) impersonal exchange and (c) bureaucratic governance.

296 

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The structuring effects of habitus in transmitting the practical knowledge of manufacturing had come to bear on the QPS ‘horizontal mobility of capital’ related to the inflow of external capital into the secondary sector. Manufacturing as an objective professional possibility did not become significant enough in the context to attract external sources of even Sharia-­ compliant credit. Hence, related to the inflow of capital as an aspect of QPS, the sector did not show trends indicating a structurally significant sector in the economy; it was not a determinant for economic resource allocation beyond those who were already engaged in it or were personally exposed to it through their life-history. Meanwhile, regarding the other component of this QPS, once entering the sector, investment capital retained a ‘sunk’ quality, which made it difficult to retrieve for re-­allocation for another investment within the sector or industry, or for withdrawing it entirely to invest somewhere else. As such, its mobility was reduced significantly. As per the two criteria of this QPS, mobility of capital into and within the sector was therefore limited and constrained by the physical attributes of this sector. Related to the QPS ‘inter-sectoral vertical expansion’, the sector did not show signs of having retained structurally significant importance in the economy. As structured by habitus’ practical knowledge, the observance of the emerging possibilities for deciding where to invest, that is, the tendency to take advantage of backward and forward linkages, was less common among the cases (it almost did not exist apart from one case which was established expressly to produce intermediate goods for use in other industries). As the data on access to raw material indicates, the majority of manufacturing units sourced their raw material or technically sophisticated components (e.g. chemical additions) from outside or purchased them from importers. Concerning the QPSs ‘bureaucratic governance’ and ‘impersonal exchange’, they were not witnessed beyond a limited scale. Trends pointing towards division of labour in the bureaucracy of the units could be witnessed, particularly with rising productive activity and volume of production (reflected in the estimated net value of assets by investors), that is, size of the productive activity did begin to require the establishment of sub-units that were in charge of particular tasks. But this trend was not significant among the cases investigated—in only four units a superintendent other than the investor her/himself wielded decision-­making power regarding routine affairs of the unit, while decision-making on larger questions of scale remained mostly with the authority figure. On the other

9 CONCLUSION 

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hand, the tendency for impersonal markets as a sign of moving away from order-based exchange was rarely witnessed among the cases, and if so, often in conjunction with order-based exchange practices. In these rare cases, the producer had a monopoly on producing a good or produced consumer products for which order-based purchase agreements for each separate sale would be time-consuming. As a general trend among the cases, the relationship with clients was based on personal familiarization and recognition (also needed for subsequent sales on ograyi and DP). In summary, related to the QPs, there was minimal horizontal mobility of capital, almost no vertical expansion and inter-industry specialization, high presence of personalistic top-down governance, and order-based production coupled with personalistic client network.

9.3   Contribution to Development Policy It was seen that adopting a ‘non-intervention’ EEA did not, as a logical consequence and tangible outcome, lead to entry into the manufacturing sector of ‘calculative’ individuals by being simply driven by market prices, and that the practical knowledge of this profession was transmitted in a much more gradual process tied to the empirical individual’s lived experience in Kabul’s context. The knowledge of manufacturing being available and serviceable to individuals through the workings of their habitus, an exposure to this professional possibility (i.e. life chance) based on an internalization of the knowledge of its availability constituting an integral part of their lived experience. This line of argument in the book has the implication that this knowledge was limited in the context in view of the manufacturing sector’s recentness as a sector—as an ‘organ’ in the economic ‘anatomy’ that has been traditionally characterized by subsistence farming. The evidence therefore suggests that the inflow of private capital into manufacturing activities was induced by knowledge that by nature is exclusive. A limited number having had the lived experience that exposed them to this profession in a context where manufacturing among traditionally available ‘life-­ chances’ was (and remains) in an incipient stage. As Bourdieu states regarding the concept of habitus, it functions as “an acquired system of generative schemes objectively adjusted to the particular conditions in which it is constituted”, which, when meeting life-chances in subsequent practice, “engenders all the thoughts, all the perceptions, and all the actions consistent with those conditions, and no others” (Bourdieu, 1990,

298 

K. RAFI

p.  95). This reproductive yet adaptive efficacy of habitus functions such that professional aspirations that are internalized as objective limits of possibilities, hopes, desires, plans, and so on are then externalized (they are manifested in action). The implication for development of a sector (in this case manufacturing) owing to habitus’ structuring effect concerning a profession as a life-chance that is rare or practically non-existent is that only a limited number of individuals (if any) are exposed to the practical knowledge of it due to exposure to it during their early childhood or subsequent secondary socialization. A market-oriented policy of non-­ intervention with the assumption that ‘private individuals will take care of the rest’ is seen to have confined the development of manufacturing within the boundaries of the knowledge of the limited number of individuals in Kabul judging by the cases, and the resources available to them. Moreover, the effects of import/export trade as a common profession—as an available life-chance accessible and serviceable to individual habitus due to its much longer history—can be witnessed qualitatively even in regard to manufacturing activities. Among the cases investigated, the complexity of the procedures for value-addition (the number of steps raw material goes through to result in an end-product) involved one step in most cases on imported raw material before packaging. In this way, the manufacturing sector essentially functioned as an extension of the much larger and more significant import sector, most visible in regard to cases which previously produced abroad or imported the same commodity. Technologically and chemically complex procedures on raw material took place outside Afghanistan and such capacity had not developed domestically. The word for import/export trade and profit-seeking economic activity in general is the same in the context: tojarat (business). This shows that import/export (mostly import) business shaped the prevalent social knowledge of all “trades”. This itself was a symbolic classification revealing the objective range of ‘profitable’ professional possibilities that has traditionally been available in Kabul and that structures individual habitus. Manufacturing as a nascent sector is one form of “trade” (tojarat), a peripheral and an add-on to the import/export’s significant profitable realm. To transform this balance, there is a need for a conscious ‘pedagogic action’ (a la Bourdieu) to practically propagate the knowledge of the manufacturing sector beyond the knowledge confines restricted to the individuals whose arbitrary life-chances have exposed them to the practical knowledge of this sector. This will require bureaucratic ‘planning’ by the state to transfer knowledge regarding this sector’s development from

9 CONCLUSION 

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other places and past experiences and adapt it to the context as one mitigation strategy against the limitation in knowledge of this sector. Some level of clearly devised guidelines and communication strategy for indicating key industries as targets of time-bound concerted supportive effort for industrial promotion can be instrumental towards this end (see Chang, 1996, for elaboration on ‘industrial policy’ and Chun, 2018, for an application of such a policy in the post- conflict South Korean economy during the latter half of the twentieth century). Even more decisively, channelling financial credit towards this sector can lessen the constraints that practice of ograyi and DP sales was seen to generate for producers in the form of circulating capital shortage. It is worth pointing out that there may be legitimate doubts as to adopting an ‘intervention’ framework owing to the potential and actual inadequacies of government institutions in Afghanistan. These, however, should be attributed to this apparatus’ consignment to an ‘external’ role by EEA’s ‘non-intervention’ framework, and as provider of public goods1 only. This was when the latter task was also undermined by the effects of ongoing conflict (determinant ‘1’). By cancelling the possibility of ‘intervention’ and due to inadequate public goods provision by the state owing to the conflict, the country’s economy perforce attained a truly laissez-­ faire character (in a literal sense), where most areas related to production were left to private investors to handle, from whom the state demanded taxes upon first reported earnings, acting as a formidable hindrance as a result. Judging the (un)suitability of a degree of the state’s coordinating intervention as a resource-allocative regime during 2002–2018 based on Afghanistan’s former government’s state-institutional capacity would have been, on the other hand, to judge it based on the effects of the function it was not given under EEA. That is, it would be assessing its capabilities not based on what it could be if an ‘intervention’ policy were adopted but based on how it existed towards the end on the basis of what EEA policy did not on principle condone in relation to resource allocation. To use an analogy, it would be akin to assessing an individual’s climbing capability when they have been told to live on land all along. As suggested by Chang (1996, introduction), countries are not equipped with institutional

1  Goods whose use is non-excludable and non-rivalrous and, in terms of property rights, is accepted as such, such as national defence.

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capability from the start and the role of ‘learning-by-doing’ is crucial for the development of these capabilities. Finally, in economic domains where prices as recurring ‘signals’ have yet to develop—accounting also for the gradual emergence of institutions that underpin such a ‘signal’—an investor by her/himself is endowed with the vantage point as a decisor of resource use (or its scarcity) in much the same way as a government bureaucrat in charge of the industrial sector. They are both deprived of the larger trends in that domain that is transmitted by ‘price’ information while the latter, at minimum, has access to official data by virtue of the nature of her/his profession. When prices are removed from the picture, an investor is likely to rely on socially contingent practical knowledge as the main source for deciding where to allocate personal economic resources (as witnessed in the book). Hence, the ‘efficiency’ (in a material sense only) expected by individual entrepreneurial knowledge in Hayek’s (1945) sense is far from realizable in these circumstances. As a generalizable heuristic derived from the Bourdieusian framework, I propose that wherever habitus is unlikely to have been exposed to manufacturing through an objective lived experience (the simple cues for this can be provided by the history of the context’s political economy), bureaucratic intervention is required to adjust resource allocation to this social reality, with an eye for the development of manufacturing as part of an economic growth strategy. The nature of such an intervention, whether informational or material (or a combination of both), direct or indirect, could be a topic of future empirical investigation. Such an intervention did not imply a direct influencing of ‘implicit’ embodied institutions, but merely adjusts policy to the expected limitations they might bring about with respect to a particular growth strategy.

9.4   A Methodological Note The epistemology underlying EEA presupposes a universal rational faculty towards which economic activity is thought to converge, one likely outcome of it being the notion of ‘optimal’ allocation and, in a Smithian conception, general social prosperity. As shown, this a priori assumption in method can lead to theoretical and policy formulations that are well off the mark with how allocation takes place in reality, at least in a context like Kabul. Investor habitus, rooted in social structures, structured the way available means were allocated, which was mediated by the elements in the

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field, which subsequently came to bear on these resources’ use and availability for future (re)application should social well-being deem it necessary. The study warrants a fundamental re-assessment of the methodological point of departure in the study of individual allocative decisions, namely, taking the combined issues of habitus, field and institutionalized practices of habitus, including the non-material forms of capital, as significant explanatory elements and as part of a single framework summarized in Bourdieu’s formulation: [(habitus)(capital)] + field = practice (Bourdieu, 1984, p. 101). This epistemology espouses ‘interest’ (even self-interest understood as utility maximization) as a motivation behind social practice. However, it re-directs the lens from pre-given notions (e.g. rational choice theory) to empirical investigation and the search for data regarding the dispositions embedded in individual rationality that defines this interest, whose outer display is seen in social practice. This makes it incumbent on the researcher to discover the ‘underlying mechanism’ (objective social structures rendered as subjective disposition, or habitus) through a retroductive epistemology that generates apparently perceptible representations of individual interest and what they entail in social practice. This epistemology also permits having a relatively context-sensitive prefieldwork mindset for devising policy. The policymaking process can benefit from secondary data in a provisional stage by using a Bourdieusian framework to map out the structuring effects of habitus, prior to supplementing this partial picture with a posteriori data when conditions for data collection become favourable.

9.5   Areas for Future Research 1. How a policy of ‘intervention’ in resource allocation should look in concrete detail in a context like Kabul is one area for future research (keeping in mind that following the recent political changes and the ouster of the country’s republican government, policy debates have witnessed a drastic setback). The nature of such intervention, whether informational or material (or a combination of both), direct or indirect, only by the state or a combination of state and NGOs, can be studied in relation to particular industries. As alluded to in Sect. 9.3. of this chapter, study of devising a context-adapted guideline and communication strategy by the state for indicating key

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industries as targets of time-­bound concerted supportive effort for industrial promotion, and the study of ways to channel financial credit towards this sector to lessen the constraints that practice of ograyi and DP sales was seen to generate for producers in the form of circulating capital shortage, can be the two concrete areas for future research. Moreover, more study is needed concerning such an intervention and how it can target the social effects that have obtained in the manufacturing sector in Kabul in the form of reproducing the patriarchal hierarchy of power, for which the legal form that distinguishes the right-obligations structure that determines, among others, rules governing corporate governance constitutes an important area for future research. 2. Researching a ‘threshold’ in Kabul’s political economy where the exposure of habitus to ‘market prices’ becomes relatively ubiquitous, the quantitative and qualitative measures to determine this threshold, and its effect on resource allocation is another area of future research. This can more suitably be done in conditions present in Kabul (and Afghanistan in general), which is at a point where the socially contingent knowledge other than market prices remain predominant, as shown in the book, for determining resource allocation, but it was also subject to what can mostly be considered a political project to move towards a state where the range of efficacity of market prices as a determining factor for resource allocation is, in principle, meant to grow. The study of the evolution of the latter process could be a valuable contribution to economic history, as well as its implications in terms of social and material development. 3. Considering the utility of the ‘mega-structure’ family unit for the book and for the application of a Bourdieusian framework in Kabul, longitudinal and cross-sectional investigation of this social structure in Kabul (and Afghanistan) can illuminate the intricacies of the process of habitus’ formation in a relatively more comprehensive form than the provisional one relied on in the book. The study of this social structure constitutes another important area for future research.

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References Bourdieu, P. (1984). Distinction. Harvard University Press. Bourdieu, P. (1990). The logic of practice (R. Nice, Trans. from French). Cambridge University Press. Chang, H. J. (1996). Political economy of industrial policy. Macmillan Press. Chun, S. H. (2018). The economic development of South Korea. Routledge. Hayek, F. (1945). The use of knowledge in society. American Economic Review, 35(4), 519–530. North, D. (1990). Institutions, Institutional change and economic performance. Cambridge University Press. North, D. (2005). Institutions and the performance of economies over time. In C.  Menard and M.  Shirley (Eds.), Handbook of new institutional economics (pp. 21–30). Springer. Simon, H. (1955). A behavioural model of rational choice. The Quarterly Journal of Economics, 69(1), 99–188. Williamson, O. (2000). The new institutional economics: taking stock, looking ahead. Journal of Economic Literature, 38, 595–613.



aPPenDices

Table A1  ACBR-IP registrations according to sector Area of business activity

Number of licences issued in post-2001 period

Trade Transit Services Construction Manufacturing Transportation and storage Professional, scientific and technical activities Public administration and defence; compulsory social security Administrative and support service activities Wholesale and retail trade; repair of motor vehicles and motorcycles Water supply; sewerage, waste management and remediation activities Electricity, gas, steam and air conditioning supply Education Accommodation and food service activities Agriculture Mining Petroleum Transport

61080 2832 5342 27935 5646 7938 2454 65 425 45 223 353 713 74 185 252 125 153 (continued)

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 K. Rafi, Patriarchal Hierarchy, https://doi.org/10.1007/978-3-030-98407-6

305

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APPENDICES

Table A1 (continued) Area of business activity

Number of licences issued in post-2001 period

Health Cooperative Finance Arts, entertainment and recreation Information and Communication Technology Real estate activities Other Total

173 91 16 31 134 6 1832 118608

Source: ACBR-IP data as of 13 March 2018

Table A2  ACBR-IP registration according to sector (Kabul) Area of business activity Trade Transit Services Construction Manufacturing Transportation and storage Professional, scientific and technical activities Public administration and defence; compulsory social security Administrative and support service activities Wholesale and retail trade; repair of motor vehicles and motorcycles Water supply; sewerage, waste management and remediation activities Electricity, gas, steam and air conditioning supply Education Accommodation and food service activities Agriculture Mining Petroleum Transport Health Cooperative Finance Arts, entertainment and recreation Information and Communication Technology Real estate activities Other Source: ACBR-IP data as of 13 March 2018

Number of licences issued in post-2001 period 27920 2302 3104 16007 2250 5698 2075 51 348 25 188 198 351 59 37 171 110 112 66 45 14 27 99 6 1278

 APPENDICES 

307

Table A3  Nodes for thematic analysis Working conditions—type of machines Type of manufacture

Social status affiliation of the investor

National or Kabul market

Scale corresponding to market uncertainty

Pricing policy

Transaction type—ograyi or cash Tracing the initial reasons for investment Collective action

Re-investment as a sign Mention of of hope or struggle afghani vs dollar Rehearsed response

Challenges and opportunities Technical language Divine goodwill

Structures of economic governance Stats

Marketing method and client relationship Backward and forward linkage Market share and competition

Production-related services

Labour and its costs

Production modality— pre- and post-order production

Interviewee designation

Initial capital, ownership structure and access to credit Reasons for investment continuation Government industrial policy First steps of setting up Financial dependency Current value of investment and production capacity Community pay-back

Certification and technical knowledge

M

M

M

M

M

M

M

M

M

M

M

M

M

M

M

M

M

ABNM-P

ABM-P

AGHM-P

AMPM-P

AM-P18

AM-P27

ARHM-P

BAKM-P

BAM-P

BHM-P

BM-P

DAAM-P

DMYM-P

GZAM-U

HKGM-P

HMKM-P

Gender

AAM-P

details

classificatory

Interviewee/

40—5

20–30

30–40

50–100

85

20–25

20–25

100–110

60

300–350

employing

No longer

10

70–75

150–160

20–50

5

10–20

No. workers

Gas cylinders

Tissue paper

products)

Food (dairy

PVC pipes

Printing press

Plastic Footwear

Electrical wire

Panel boards

PVC pipes

Soft drinks

Cement poles

Detergent

Pharmaceuticals

IMIRc

Food (wheat flour)

Food (spices)

Panel boards

Type of product

Table A4  Interviewee classificatory details

4–5 yrs

6 yrs

15 yrs

3 yrs.

8 yrs

1 yr>

6 yrs

Length of work

Pakistan

None

None

Pakistan

NDd

None

Iran

Iran

None

Pakistan)

35 yrs (first 21 yrs in

3 yrs

12 yrs

Pakistan)

24 yrs (first 19 yrs in

12 yrs

business)

(Grandfather’s

Unknown,

12 yrs

10 yrs

7–8 yrs

United States 12 yrs

Iran

None

None

None

Pakistan

NDb

Iran

experience

Migration

$100k–$150k

$500k

$500k–$1m

$1.5m

55–60

30–35

50–55

50–55

45–50

30–35

Unknown

$1.5m

45–50

35–40

30–35

60


25–30

10

150–155

10

40–45

20–25

45–50

25–26

20–25

producers)

34 honey

N/A (union of

M

HM-Ue

Printing press

Detergent

Printing press

Detergent

processing)

Food (dry fruit

Cement poles

pickles)

Food (jam and

IMIR

Jewellery

cement poles

Panel boards and

Food (cooking oil)

Electrical wire

Panel boards

containers

Plastic bottles and

PVC pipes

Plasticware

Food (honey)

None

None

ND

Iran

ND

None

None

Pakistan

None

Iran

ND

Pakistan

None

Pakistan

Pakistan

None

None

4 yrs

10 yrs

18 yrs

6 yrs

1 yr>

5–6 yrs

1 yr>

1 yr

6 yrs

14 yrs

14 yrs

Pakistan)

14 yrs (first 12 yrs in

16 yrs

13–14 yrs

3 yrs

5–6 yrs

1 yr

$80k–$100k

$1m

$700k

$4m

N/Ah

$500k–$1m

$10k>

$4m

$10k

$1–$1.5m

$14m

$200k–$250k

$1m–$1.5m

$3.5m–$4m

$500–$1m

2 yrs

5 yrs

17 yrs

1–2 yrs

1 yr>

10 yrs

7–8 yrs

Length of work

$50k

$100k–$110k

$8m

system)

$5m (sanitary

$2m

$200k–$250k

$2m

$10k>

$40m

$2.7k–$4k

$5k>

$2m

$10k>

$1.2m

$50k

investment (est.)

Current value of

30–40

55–60

50–55

40–45

40–45

40–45

30–35

30–35

40–45

40–45

50–55

40–45

20–25

65–70

40–45

Age

Out

In (JM)

In

plasticware)

In—In (JM,

In

Out

In

Out

In

Out

Out

In

Out

In (JM)

Out

respect of IPs a)

Location (in

310  APPENDICES

10

140

F

M

ZKF-Pn

ZMM-Po

15–20

SNM-Pm

Detergent

IMIR

jam, pickles)

Food (tomato paste,

Food (honey)

Iran

Pakistan

Iran

None

4 yrs

2 yrs

10 yrs

3 yrs

$62k

$3m

$100k

$40k

40–45

30–35

45–55

30–35

Out

In

Out

Out

b

a

Industrial park Not distinguishable (not observed as significant for generating the incentive for investment) c Iron melting and iron rod production d In this case, the migration experience (in Pakistan) mattered to the extent of providing the social environment in which the initial steps of the business were conceived but not particularly as a learning process underlying the initial motive for production e Outlier case: The association was in northeastern Baghlan province, but the main sales office was in Kabul f Interview was taken with the sales manager and not the investor g Jumma Mohammad Mohammedi Industrial Park (there were two industrial parks in Kabul—the main one I have mentioned simply as IP) h Production infrastructure not yet procured and set up i Interview with sales manager j The interviewee owns two companies, both in industrial parks but in different ones, one producing sanitary fittings, tabs and pipes (sanitary system), the other producing plasticware k The interviewee had another production firm specializing in salt production which was inactive—both located in the same IP (Jumma Mohammad Mohammedi) l The interviewee learned and brought the experience of producing salt from Pakistan to Afghanistan but now specializes in plasticware production m The interviewee was a member of a union of honey producers but runs his own private business of processing and selling honey bought from other members n The production unit was located in Kapisa, a province adjacent to Kabul, but most sales happen in Kabul o Interviewee was a member of a group of family businesses; his was one out of five others. One other also specialized in manufacturing

20–25

M

M

SNMM-P

 APPENDICES 

311

312 

APPENDICES

Table A5  Drawdown of work hours Investor

Number of work hours (per day, per item)

AAM ABM ABNM AGHM AM-P18 AM-27 AMPM ARHM BAKM BAM BHM BM DAAM DMYM FBF FM/NANM GZAM HKGM HMKM HRKM HSMM HSM HSSM JKM JM MAAM MAM MEWM MMF MM MSM MSSM MTM MWQM MZM- P15 MZM- P23 NAAM NGF NMF NM NNM NSM NUHM

9 h (unfixed/can increase in times of heightened workload 8 (unfixed) (overtime pay) 8 to 9 (unfixed) 12 (fixed) 8 (fixed) Unknown 9 (fixed) 8 (unfixed) 11 (unfixed) 8 (fixed) 12 (fixed) 12 (unfixed—work during holidays) 8 (up to 14 normally with overtime pay hourly) 12 hours 8 (unfixed—up to 10 or 12 hours) 8.5 (unfixed/hourly overtime pay) 8 (fixed) 10.5 (unfixed) 12 (unfixed) 8 (unfixed) 12 (fixed) 24 h stay in work compound (unfixed) 10 h–15 h (overtime pay hourly/holiday work) 12 h (fixed) 10 (unfixed) 10 (unfixed/can go on to 15 h or more in times of heightened workload) 8 h (unfixed/hourly overtime pay) 12 h (unfixed/hourly overtime pay) 8.5 (unfixed) 10 (unfixed/stipulated based on the estimated workload) (unfixed) 8 h (unfixed/hourly overtime pay) 9 h (unfixed/increase in times of heightened workload) 10–12 (unfixed) 9 h (unfixed/increases up to 12 during times of heightened workload) 10 h (unfixed) 9 h (unfixed/hourly overtime pay) Item-based (8 h work paid Afs. 400) 7 h (unfixed) Unknown 8 h 9 h (unfixed) 10 h (continued)

 APPENDICES 

313

Table A5 (continued) Investor

Number of work hours (per day, per item)

PKZM QYM RHF SNMM SNM ZKF ZMM

8 h (usually goes up to 10 or 11/hourly overtime pay) 10 h (fixed) 7 h 10–12 (unfixed/increases or decreases based on the workload) 8 h unknown 8 h (unfixed/usually goes up to 10 h/hourly overtime pay)

Table A6  Wage distribution (min to max range) Investor/ wages

Min wagea (US dollar)

Max wage (US dollar)

AAM-P ABM-P ABNM-P AGHM-P AM-P18 AM-P27 AMPM-P ARHM-P BAKM-P BAM-P BHM-P BM-P DAAM-P DMYM-P FBF-P FM-P GZAM-U HKGM-P HMKM-P HRKM-P

166.4 0.15/sack 55.5 138.7 111 138.7 69.3 270 83.2 277.4 138.7 69.3 100 150 41.6 3.2/day 83.2 97 111 0.01/item of 0.1 value 97 97 300 111 111 138.7 55.5

416.1 624 83.2 800 180 166.4 485.4 500 (average amount/highest not mentioned) 138.7 693.5 416 138.7 1000 1000 208 3000 277.4 693.5 208

HSMM-P HSM-P HSSM-P JKM-P JM-P MAAM-P MAM-P

554.8 800 500 138.7 554.8 693.5 138.7 (continued)

314 

APPENDICES

Table A6 (continued) Investor/ wages

Min wagea (US dollar)

Max wage (US dollar)

MEWM-P

97

MMF-P MM-P MSM-P MSSM-P MTM-P MWQM-P MZM-P15 MZM-P23 NAAM-P NGF-P

69 124.8 138.7 138.7 83 97 45.7 97 83 6.9/3 days (item-based) 4/day Unknown 5.5/daily 97 83 166.4 41.6 69 0.08/item 69 1.4/day 111

(Decided by the foreman who receives payment in bulk) 111 208 277.4 166.4 (commission-based) 277.4 208 (One-person commission-based paid the highest) 138.7 208 41.6/20 days (item-based)

NMF-P NM-P NNM-P NSM-P NUHM-P PKZM-P QYM-P RHF-P SNMM-P SNM-P ZKF-P ZMM-P a

Monthly wages (unless otherwise specified)

83 Unknown 249.7 624 1387 166 69 0.5/carton (for marketing personnel) 166 83 485

0

Badghis Baghlan Balkh Bamyan Daikundi Farah Faryab Ghazni Ghor Helmand Herat Jowzjan Kabul Kandahar Kapisa Khost Kunar Kunduz Laghman Logar Nimruz Ningarhar Nuristan Paktia Paktika Panjshir Parwan Samangan Sar-I Pul Takhar Uruzgan Wardak Zabul Badakshan

Trade

0

Real estate activities

Information and…

Arts, entertainment…

Finance

Cooperative

Health

Transport

Other

Petroleum

Mining

Agriculture

Accommodation and…

Education

Electricity, gas, steam…

Water supply;…

Wholesale and retail…

Administrative and…

Public administration…

Professional, scientific…

Transportation and…

Manufacturing

Construction

Services

Transit

 Appendices 

315

60000 70000

50000

40000

30000

20000

10000

Source: ACBR-IP data as of March 13, 2018

Fig. A1  Number of ACBR-IP licences by sector in post-2001 period. (Source: ACBR-IP data as of 13 March 2018)

70000

60000

50000

40000

30000

20000

10000

Fig. A2  Private business registration per province (2002 onward). (Source: ACBR-IP data as of 13 March 2018)

Trade Services Manufacturing

0

Public administration and…

Fig. A4  Minimum number of work hours/day 51 348 25 188198351 59 37 171110112 66 45 14 27 99 6

Other

Real estate activities

Information and…

Arts, entertainment and…

Finance

Cooperative

Health

Transport

Petroleum

Mining

Agriculture

Accommodation and food…

Education

Electricity, gas, steam and air…

Water supply; sewerage,…

Wholesale and retail trade;…

2075

Administrative and support…

2250

Professional, scientific and…

23023104

Transportation and Storage

20000

Construction

5000

Transit

316  Appendices

30000 27920

25000

15000 16007

10000 5698

1278

Fig. A3  Number of licences issued in post-2001 period in Kabul. (Source: ACBR-IP data as of 13 March 2018)

 Appendices 

Fig. A5  Maximum monthly salary (USD)

Fig. A6  Minimum monthly salary (USD)

317

318 

Appendices

Fig. A7  Daily wage (USD)

Fig. A8  Item-based wages (USD)

inDex1

A Acemoglu, Daron, 4, 14, 41 Active institutional elements (AIEs), 16, 99, 109, 123, 125–128, 171, 176, 181, 182, 184, 189–191, 193, 195, 196, 198, 202, 203, 207, 210, 212, 219, 254, 259, 289, 291 Adaptive strategies, vi, 13, 16, 109, 115, 128, 157, 205, 207, 254, 257–259, 284, 286, 289, 293 Affective involvement, 228 Afghan Authority for the Coordination of Assistance, 138 Afghan government, 10, 28, 140, 143, 221 Afghani, 174, 223 Afghanistan, 4, 8–12, 19, 21, 23, 26–28, 58, 60, 62, 85, 112–115, 137–148, 159, 161, 162, 164, 168, 176, 185, 187, 192–194,

192n36, 199n73, 210, 211, 214, 215, 219, 232, 234, 235, 240, 242, 244, 245, 249, 251–253, 259n1, 271, 272n47, 283, 290, 295, 298, 299, 302, 311 Afghanistan Central Business Registration and Intellectual Property Rights (ACBR-IP), 27, 29, 29n26, 139n4, 161, 161n4, 306 The Afghanistan Compact, 140 Afghanistan Industrial Association (AIA), 163 Afghanistan Interim Administration, 138, 199n73 Afghanistan Reconstruction Trust Fund (ARTF), 144 Afghanistan Relief, Reconstruction and Civilian Operations (RRCO), 145, 146, 149 AIEs, see Active institutional elements

 Note: Page numbers followed by ‘n’ refer to notes.

1

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 K. Rafi, Patriarchal Hierarchy, https://doi.org/10.1007/978-3-030-98407-6

319

320 

INDEX

Allocative regime, 6, 8, 13, 14, 21, 25, 44, 51, 53n10, 55, 57, 58, 139, 299 Arbitrary pay scale, 267, 268, 270, 273–275, 278, 286, 294 Arbitrary work hours, 278 Asset specificity, 159, 168, 206, 208, 209, 211, 213, 254, 292 Austrian School, 48 Authority figure, 115, 116, 123–125, 184–188, 201, 202, 257, 258, 260, 262, 263, 266, 267, 269, 284, 285, 291, 293, 294, 296 See also Patriarchal hierarchy B Backward and forward linkages, 24, 255, 296 Bankspeak, 55 Becker, Ernest, 46, 125n36, 197 Bentham, Jeremy, 46 Bonn Agreement, 9, 137, 140 Bounded rationality, 37, 45, 47, 48, 71, 84n8, 113, 290 Bourdieu, Pierre, 6, 7, 15, 26, 47, 97n17, 98–103, 105–109, 105n21, 106n22, 183, 226, 291, 293, 297, 298, 301 Bourdieusian framework, 12, 103, 104, 106, 157, 175, 295, 300–302 C Calculative approach, 37 Capital goods, 20, 21, 24, 208, 209 Chang, Ha-Joon, 89, 91, 139, 139n3, 299 Choice-theoretic, 45, 71, 86, 87 Circulating capital, 216, 217, 221, 223, 225, 255, 262, 299, 302

Coase, Ronald, 4, 13, 36, 38, 39 Coding, 171, 172 Coercive state apparatus, 69, 82, 93, 94, 100, 268, 278 Cold War, 53, 58, 148 Communitarian norm, 125, 126, 182, 202, 235, 250, 286 Conflict-affected, 11, 16, 28, 148, 160, 227 Conflict-affected market economy, 28 “Contract (qaraar’dad)”, 269, 270 Conversational interviews, 158 Coordination, 5, 6, 13, 25, 36, 43, 59, 80, 87, 137, 161, 177, 262, 265 Corporate tax, 249 Corruption, 147, 245, 248, 249 Cultural capital, 107, 126, 186, 226, 229, 232, 233, 255, 292 D De Soto, Hernando, 4, 14, 39, 40 Debt retrieval, 216, 217, 219 Decision-making process, vi, 12, 72, 82, 125, 182, 202, 258, 263, 292 Deep marketization, 44n6, 60 Deferred payment (DP), 214–223, 253–255, 279, 281, 287, 292, 297, 299, 302 Definable properties, 92 Delegation (in decision-making), 260, 262, 294 Department of Defense (DoD), 10 Directorate of Public Enterprises, 163 Disposition, 7, 38, 45, 101, 105, 125, 126, 177, 183, 184, 196n57, 229, 235, 245, 278, 301 Dispute resolution, 13, 219, 245, 249 Division of labour, 22, 24, 117, 126, 128, 227, 262, 263, 266, 274, 286, 296

 INDEX 

Dollars, 174, 223 Double movement, 90 Dumping, 251 Durkheim, Emile, 93, 109 E Early childhood, 15, 43, 111, 125, 184, 188, 213, 298 Economic policy of Afghanistan, 2 EEA, 3, 5, 10–13, 15, 21, 25, 28, 44, 45, 47, 51, 137–151, 201 Embodied institutions, 6, 84, 99, 290, 300 Empirical human, 47–49, 47n7, 70, 83, 88, 239, 290 Empirical individual interest, 15 Emulation, 125, 182–185, 202, 291 Enabling environment, 4, 10, 51, 52, 55–58, 56n11, 78, 139, 290 See also Enabling environment approach (EEA) Enabling environment approach (EEA), 2, 51, 56, 58–62, 113, 126, 205, 238, 239, 245–254, 289, 290, 293, 295, 297, 299, 300 Engels, Friedrich, 104, 155 Enterprise continuation, vi, 16, 109, 111n24, 126, 289, 293 Environment, see Enabling environment Epistemological, 6, 7n10, 12, 15, 16, 26, 35, 40, 42, 47, 70, 71, 83, 102, 295 Ersatz, see Ersatz Human Ersatz human, 47, 47n7, 50, 58, 61, 71, 84, 94n14, 102, 156, 207, 290 Expeditious cost adjustment, 258, 267, 284, 285

321

Explicit formal institutional category, 69 Explicit institutions, 92, 93, 95, 96, 100, 117, 219n33 Explicit socio-structural institutions, 69 F Family hierarchy, vi, 8, 13, 21, 124, 125, 189, 201, 205, 260, 267 Family-owned, 263, 264, 285 Fatalism, 125, 212 Female investors, 265 Field, vi, 1, 4, 11, 12, 16, 17, 19, 26, 28, 42, 99, 100, 103, 105, 108, 109, 111, 115, 126–128, 157, 158, 168, 176, 184, 185, 188, 196, 199, 202, 205–208, 210, 212, 213, 215, 226, 227, 233, 238, 239, 242, 243, 248, 254, 255, 258–262, 267, 272n47, 276, 279, 283, 284, 286, 289, 291–293, 295, 301 Field of production, vi, 1, 12, 16, 21, 109, 115, 126, 127, 157, 205, 239, 255, 258, 276, 295 First category of units, 209–210 Foreign aid, 9, 12, 23, 53, 62, 115, 138n2, 143–149, 199, 252 Formal, 1–3, 6, 14, 37–39, 42, 44, 45, 59, 74, 75, 77, 78, 78n5, 80, 81, 84–87, 87n9, 87n10, 89, 91n13, 99n18, 110–112, 125, 156, 162, 173, 175, 189, 199, 214, 269–271, 280, 290 Formal institutions, 2, 14, 74, 75, 78, 86–87, 106n22, 125 Friedman, Milton, 48

322 

INDEX

G Ghani, Ashraf, 142, 247 God, 117–123, 125, 126n37, 191, 194, 230, 261 Good governance, 53, 54 Governance, 2, 8, 9, 16, 22, 38, 53–55, 57–59, 61, 70, 72, 123, 128, 138, 147, 149, 160n1, 163, 228, 257–259, 259n1, 261, 262, 264, 266, 267, 269, 271, 275, 279, 284–286, 290, 293–297, 302 Government support, 245 H Habitus, 6–8, 13, 15, 16, 21, 22, 24, 26, 70, 73, 83, 87, 87n9, 90, 96, 99–103, 105, 108, 109, 111–116, 111n24, 118–121, 123, 126, 127, 156, 157, 175, 181–183, 185, 187, 190, 191, 193–195, 196n57, 198, 201–203, 205–208, 210, 213, 215, 219, 230, 237, 239, 254, 255, 257–261, 268, 269, 271, 275, 279, 281, 284–286, 289–293, 295–298, 300–302 Hayek, Frederick, 5, 38, 48, 82, 300 Hirschman, Albert, 20 Hodgson, Goeffry, 2, 89–91 Homeland, 120, 125, 182, 192–195, 198, 202, 235–237, 255, 292, 293 Horizontal mobility of capital, 24, 181, 199, 203, 205, 295–297 Human landscape, 42, 43, 72, 86 Humanly devised constraints, 37, 74 I IFIs, see International financial institutions IMF, see International Monetary Fund

Impersonal exchange, 25, 205, 259, 284, 286, 295, 296 Implicit institutions, 6, 92, 95–97, 100–101, 117, 125, 126, 202, 290 Implicit socio-structural institutions, 69 See also Embodied Institutions Individual allocative decisions, 1 Individual economic motivation, vi, 113 Individual socially contingent knowledge, v Industry policy, 141 Informal, vi, 1, 3, 36, 40, 42–44, 72, 74–77, 80, 83, 84n7, 85, 87, 89, 99n18, 112, 156, 189 Informal institutions, 3, 16, 18, 44, 72, 74, 75, 77, 83, 84n7, 85, 189 Institution, v, 4, 11, 13, 14, 35, 74, 75, 80, 83, 86, 89, 92, 93, 96, 107, 115, 117, 144, 182, 215, 278, 291 Institutional environment, 2, 44, 50, 60, 83, 85 Institutionalist, 2, 4, 7, 44, 57, 60, 72, 85, 89, 104, 290, 291, 295 Institutionalized practices, 8, 70, 101, 102, 191, 202, 301 Institutional political economy, see Old Institutionalism (OIE) Insurgency, 9, 11, 27, 126, 145, 147, 205, 239, 293 Integrated approach, 147 Intentional definition, 73, 92–94, 96, 102 Interest-based loan, 76n4, 201 Interestedness, 46, 104, 195, 202, 290, 292 Interim Afghanistan National Development Strategy, 139 International financial institutions (IFIs), 4, 10, 25, 51, 52, 60, 138, 148, 150

 INDEX 

International military drawdown, 149, 161, 172, 240, 241, 248, 278 International Monetary Fund (IMF), 3, 10, 28, 57, 138–140, 143, 164, 246 Inter-subjective, 92, 94 Intervention, 1, 5, 6, 22, 55, 58, 85, 157, 299–301 Investigation, 4, 48, 70, 72, 74, 75, 77, 83, 112, 177, 219, 226, 258, 300–302 Iran, 114, 188, 190, 195, 197, 215, 225, 226, 245, 251 Islam, 16, 76n4, 114, 117, 118, 120n35, 126, 175, 200, 230, 234, 291 Islamic Law, 200 Issue of scale, 257 K Kabul, 1, 2, 4, 5, 8, 11, 12, 15, 16, 18, 19, 21–25, 27–29, 103, 108, 112, 116, 123, 127, 128, 141, 144, 157, 158, 160–165, 162n5, 164n7, 168, 173, 175, 177, 178, 185, 187–191, 193–195, 196n59, 198, 200, 211, 214, 216, 223, 226, 227, 232, 235, 237, 240–242, 250, 252, 253, 259n1, 261, 276, 283–285, 289, 291, 293, 295, 297, 298, 300–302, 306, 311 L Labour union, 271, 272 Laws and regulatory framework, 59 Lean government, 139 Leap of faith, 126, 213 Liberalization, 10, 56, 138, 140, 150, 251

323

Liberal peace, 151 Lived experience, 1, 8, 15, 24, 48, 100, 104, 175, 202, 203, 206, 213, 291, 297, 300 M Machinery, 28, 169, 191, 198, 208–214, 217, 249, 253, 254, 257 Manufacturing machine, 11, 159, 168–170, 206, 209, 274, 285 Manufacturing sector, v–vii, 1, 2, 7, 8, 11, 12, 16, 19–25, 27, 103, 111n24, 126, 141, 143, 157, 161, 163, 181, 182, 199, 203, 245, 251, 259, 291, 295, 297, 298, 302 Market-based, 3, 4, 14, 37, 44, 51, 53n10, 72, 81, 85, 87, 278, 284, 290 Market economy, v, 11, 14, 16, 39, 41, 44, 45, 56, 85, 87, 137, 139–141, 143, 160, 227 Market frictions, 4, 85, 87 Market-oriented, v, vii, 2, 4, 11, 21, 26, 27, 51, 52, 56, 60, 89, 139, 142, 143, 151, 205, 239, 293, 295, 298 Market prices, v, 6, 13, 16, 228, 231, 253, 289, 297, 302 Markets as primal institutions, 50, 59, 291 Market share, 201, 209, 210, 216, 217 Marx, Karl, 104, 105n20, 155, 226 Material gain, 121, 230, 232 Mega-structure, 108, 109, 111, 111n24, 112, 115, 123, 125, 127, 183, 261, 291, 302 See also Patriarchal family Menard, Claude, 4, 41, 44, 60, 82

324 

INDEX

Methodological individualism, 47, 104 Mickiewicz, Tomasz, 4 Migration, 116, 195, 311 Mises, Ludwig Von, 5 Mudarebah, 200 Multi-purpose, 209, 210 N National Development Framework (NDF), 138, 143 National Peace and Development Framework, 142 National Procurement Authority, 142, 247 “Negative competition” (reqaabat’e manfi), 253 Neo-classical economics, 2, 86 Network of clients, 281 New Institutionalist Economics (NIE), 2–4, 11, 35–38, 40, 41, 44, 45, 48, 51, 56, 60, 71, 72, 74, 78, 80, 82–90, 84n8, 87n11, 92, 96, 97n16, 239n134, 289–291 Non-intervention, vii, 1, 2, 6, 8, 26, 58, 290, 297–299 Non-material, 8, 17, 128, 195, 206, 226–231, 235, 237, 254, 301 Norms and rules, 7, 39, 92, 183 Norm violation, 94 North Atlantic Treaty Organization (NATO), 9, 144, 144n6, 240 North, Douglass, 3, 5n6, 7, 35, 40, 42–45, 47, 51, 56, 71, 72, 74–82, 84, 85, 88, 206, 289 O Obeisance, 125, 183–189 Obeisance, emulation and perpetuation, 183, 202 Objective social condition, 7

Ograyi, 127, 128, 200, 207, 214–222, 217n28, 253–255, 279, 281, 287, 292, 297, 299, 302 Old Institutionalism (OIE), 11, 36, 89–91, 291 Open accounts, 215, 216, 218, 220, 255 Order-based production, 25, 278–281, 286, 287, 294, 297 Ostrom, Elinor, 4, 71, 72, 97 P Pakistan, 137n1, 184, 188, 195, 197, 215, 225, 226, 245, 251, 311 Path dependency, 40, 41, 80, 81n6, 88 Patriarchal family, 13, 16, 21, 108, 127, 157, 175, 202, 205, 260, 295 Patriarchal hierarchy, v, 22, 284, 293, 302 Patrilineal, 115, 116 Perpetuation, 125, 125n36, 182, 184, 185, 202, 291 Persian, 123, 143, 158, 159, 171–173, 173n31, 196n59, 237 Personalistic, 25, 236, 247, 259, 261–263, 265–267, 269, 275, 284, 293, 297 Personalistic hierarchy, 262, 263 See also Authority figure Personal wealth, 199, 203, 212, 291 Physical propinquity, 25, 227, 293 Point of departure, 35, 71, 72, 75, 78, 83, 84, 89, 156, 291, 301 Poverty Reduction Strategy Papers (PRSPs), 58 Practical knowledge, 1, 94, 104, 157, 181–183, 185, 186, 188–190, 192, 202, 203, 206, 213, 254, 255, 263, 269, 285, 289, 291, 296–298, 300

 INDEX 

Precarity, 267, 268, 270, 272, 285, 294 Pre-order production, 25, 278, 280, 294 Private property, 41 Private sector investments, 10, 13, 28, 52, 161, 168 Project-based, 248 Property rights, 13, 14, 24, 25, 36–41, 57, 61, 61n15, 73, 74, 83, 87, 94, 94n15, 116, 120, 201, 259n1, 261, 299n1 Q Qualitative proxies of significance (QPS), 22, 181, 199, 203, 255, 286, 296 Quranic injunctions, 16, 114, 117, 120, 121, 235 R Rational choice economics (RCE), 36 Rational Choice Theory (RCT), 37, 45–50, 47n7, 71, 72, 74, 84n8, 89, 90, 97n16, 102, 104, 113, 228n83, 301 Raw material, 20, 169–171, 201, 209–211, 217n28, 223–226, 236, 237, 239, 246, 248, 249, 253, 255, 257, 279, 284, 285, 296, 298 Re-allocation or exit, 24, 206, 223, 227, 229, 238, 292 Reciprocity, 69, 71, 86, 94, 95, 125, 156 Regular pool of clients, 281, 283, 284 Reification fallacy, 84n7, 97 Religious injunctions, 8, 115 Reproduction, 8, 15, 18, 104, 155, 205, 266, 284, 295

325

Re-sellable assets, 212 Resource allocation, v, 2, 5–7, 11, 14–17, 20, 22, 26, 37, 38, 45, 50, 56, 59–61, 87n10, 88, 113, 137, 140, 142, 150, 160n1, 203, 207, 213, 239, 246, 258, 278–280, 285, 286, 289, 290, 294, 296, 299–302 Retroductive epistemology, 113, 156, 175, 301 Roundabout statism, 61 Routine decisions, 257 Rule of law, 58, 139, 147 Rules of the game, 38, 56, 57, 89 Rule violation, 94 S Samuelson, Paul, 150 Secondary sector, 5, 16, 20, 24, 125, 160, 164, 168, 181, 182, 187, 189, 190, 192, 197, 200, 203, 206, 211, 213, 218, 227, 228, 235, 237, 259n1, 261, 292, 296 Second category of units, 210–214 Securing Afghanistan’s Future (SAF), 138, 139, 143 Self-esteem, 231 Semi-automatic, 210 Sharia, 200, 203, 279, 291 Shirley, Mary M., 4, 41, 44, 60, 82 SIGAR, 5, 138, 145, 147 Simon, Herbert, 37, 45, 74, 84n8, 290 Single-owned, 263, 264, 285 Smith, Adam, 49, 49n8 Social capital, 43n5, 106–108, 106n22, 125, 190, 202, 219, 220, 223, 291, 292 Social field, 7, 11 See also Field

326 

INDEX

Socially contingent, v, 94, 181, 182, 289, 300, 302 Social status, 206, 207, 226, 227, 229–232, 234, 238, 254, 255, 292 Social status preservation, 206, 226 Social structures, v, 6, 15–18, 69, 85, 86, 89, 90, 93, 95, 98–101, 108, 115, 156, 290, 295, 300, 301 SOEs, see State-owned enterprises (SOEs) State minimalism, 60 State non-interference, v State-owned enterprises (SOEs), 28, 29, 142, 143, 160, 161, 163 Structural inequalities, 18 Structural significance of manufacturing, 16 Structured structure, 6, 101, 102 See also Habitus Subjective dispositions, 100, 101 Subjective potentiality, 6 Suicide attacks, 241, 242, 244 Sunk capital, 208, 211, 213, 296 Swapping activity, 217 Symbolic capital, 106, 119, 184, 185, 194, 202, 207, 226–228, 254, 255, 292, 293 T Tacit/explicit information, 5 Taliban, 9, 11, 61, 137, 137n1, 144, 243, 290 Tariff regime, 82, 140, 246, 250 Technical know-how, 211 Temporally precedent, 89 Thematic analysis, 171 The three N mechanism, 125, 182, 189–191, 202

Transaction costs, 3, 36, 38, 39, 41, 44, 51, 70, 72, 78, 80, 84–87, 239n134 Transcription, 158, 171, 172 Trust, 39, 69, 71, 95, 96, 106n22, 121, 125, 126, 144, 177, 189–191, 202, 214–216, 218, 222, 223, 244, 259, 261, 278, 279, 281, 283, 286 Turgot, Anne Robert, 50 2003 Afghanistan banking law, 140 2004 Constitution of Afghanistan, 10–12, 61n15, 80, 137 U Ultimate purpose, 122, 123 Unequal hierarchies of power, 17, 19 Union-based ownership, 263 Uni-purpose, 210 See also Multi-purpose United Nations Assistance Mission for Afghanistan (UNAMA), 10, 28, 138 United States (US), vii, 5, 8–10, 45, 53, 75, 76, 87n9, 138, 138n2, 143, 145, 147–149, 223, 241, 248 The United States led coalition, v US Department of Defense (DoD), 145–149 Usury, 117, 120, 126, 203, 291 Utility maximization, 14, 37, 46, 291 V Vertical sectoral expansion, 24 W War, v, 2, 8, 28, 61, 116, 151, 177, 185, 195, 235, 271

 INDEX 

Weber, Max, 93, 226 Western European Enlightenment, 50 Williamson, John, 4, 44, 51, 52n9, 59–61, 140, 148 Williamson, Oliver, 4, 4n5, 37, 59, 71, 72, 78, 86, 87, 89, 150, 197, 289

327

World Bank, 2, 3, 10, 11, 14, 19, 20, 35, 38, 45, 51–55, 57, 58, 78, 138, 139, 143, 144, 150, 199, 290 World Development Report, 3, 38, 51, 52, 54–56